OMNOVA Solutions Sells North American Commercial Wallcovering Assets to J. Josephson
FAIRLAWN, Ohio, Dec. 13, 2011 /PRNewswire/ -- OMNOVA Solutions (NYSE: OMN) today announced that it has sold certain assets of its North American commercial wallcovering business to J. Josephson, Inc., a private commercial wallcovering producer based in New Jersey. The sale includes printing cylinders, certain equipment, trademarks, contracts and other assets associated with OMNOVA's domestically-produced commercial wallcovering brands. The sale excludes OMNOVA's Columbus, Mississippi manufacturing facility. OMNOVA's North American wallcoverings, with approximately $29 million in sales, are sold through distributors into various commercial markets including hospitality, corporate office, healthcare, retail and education.
Under the agreement, OMNOVA will continue to manufacture commercial wallcovering products for J. Josephson for a period of approximately 12 to 15 months as part of an orderly transition of production from OMNOVA's Columbus, Mississippi plant to the J. Josephson plant in South Hackensack, New Jersey.
"The sale of these commercial wallcovering assets will allow OMNOVA Solutions to focus resources on our Performance Chemicals business, where in the last year we made a strategically important acquisition to expand our global position, as well as those product lines within our Decorative Products portfolio that offer greater global growth potential, including coated fabrics, performance films, laminates, digitally printed wall murals and laminated wall surfaces for the ICS (interior construction systems) market," said Kevin McMullen, OMNOVA Solutions' Chairman and Chief Executive Officer.
"The North American commercial wallcovering market has experienced a prolonged weakness in demand, exacerbated by the multi-year downturn in construction, and is down 50-60% from pre-recession highs," McMullen explained. "It was clear that consolidation was necessary for the long-term vitality of the commercial wallcovering industry."
Concurrent with the transfer of commercial wallcovering production to J. Josephson, OMNOVA will consolidate manufacturing of coated fabric, film, ICS and specialty products made at its Columbus, Mississippi plant into its other domestic and international Decorative Products facilities. Following the 12 to 15 month transition, OMNOVA plans to cease manufacturing in Columbus, but the Company will continue its Decorative Products distribution operations at the site, including customer service and technical support.
"While our presence in Columbus will be reduced, we are pleased that our distribution operations and our ties with the community will continue. Columbus has been an important part of the OMNOVA story since the plant first opened in 1963, and we value the long-standing local government and community support," said McMullen. "At the same time, we regret the impact the gradual transition of manufacturing out of Columbus will have on many of our employees who have done an exceptional job of staying focused on serving customers during a very difficult and challenging period. We are very appreciative of our employees' many contributions, and we will continue to assist and support our workers throughout the transition.
Under key terms of the transaction, OMNOVA will receive approximately $10 million in cash and three years of royalty payments for future sales of OMNOVA-based patterns. In addition, OMNOVA will retain approximately $7 million in net working capital and the cash flow associated with those assets. This will be partially offset by Columbus plant transition and manufacturing wind-down costs over the next 12 to 15 months.
This press release includes "forward-looking statements" as defined by federal securities laws. These statements, as well as any verbal statements by the Company in connection with this press release, are intended to qualify for the protections afforded forward-looking statements under the Private Securities Litigation Reform Act of 1995. Forward-looking statements reflect management's current expectation, judgment, belief, assumption, estimate or forecast about future events, circumstances or results and may address business conditions and prospects, strategy, capital structure, sales, profits, earnings, markets, products, technology, operations, customers, raw materials, financial condition, and accounting policies, among other matters. Words such as, but not limited to, "will," "may," "should," "projects," "forecasts," "seeks," "believes," "expects," "anticipates," "estimates," "intends," "plans," "targets," "optimistic," "likely," "would," "could," and similar expressions or phrases identify forward-looking statements.
All forward-looking statements involve risks and uncertainties. Many risks and uncertainties are inherent in business generally and the markets in which the Company operates or proposes to operate. Other risks and uncertainties are more specific to the Company's businesses including businesses the Company acquires. The occurrence of such risks and uncertainties and the impact of such occurrences is often not predictable or within the Company's control. Such impacts could adversely affect the Company's results and, in some cases, such effect could be material.
All written and verbal forward-looking statements attributable to the Company or any person acting on the Company's behalf are expressly qualified in their entirety by the risks, uncertainties, and cautionary statements contained herein. Any forward-looking statement speaks only as of the date on which such statement is made, and the Company undertakes no obligation, and specifically declines any obligation other than that imposed by law, to publicly update or revise any forward-looking statements whether as a result of new information, future events or otherwise.
Risks and uncertainties that may cause actual results to differ materially from expected results include, among others: economic trends affecting the economy in general and/or the Company's end-use markets; prices and availability of raw materials including styrene, butadiene, vinyl acetate monomer, polyvinyl chloride, acrylonitrile, acrylics and textiles; ability to increase pricing to offset raw material cost increases; product substitution and/or demand destruction due to product technology, performance or cost disadvantages; loss of a significant customer; customer and/or competitor consolidation; customer bankruptcy; ability to successfully develop and commercialize new products; a decrease in demand for domestically manufactured products due to increased foreign competition and off-shoring of production; ability to successfully implement productivity enhancement and cost reduction initiatives; unplanned full or partial suspension of plant operations; losses from the Company's strategic alliance, joint venture, acquisition and disposition activities, including related integration and transition activities; loss or damage due to acts of war or terrorism, natural disasters or accidents, including fires, floods, explosions and releases of hazardous substances; ability to comply, and cost of compliance with legislative and regulatory changes, including changes impacting environmental, health and safety compliance and changes which may restrict or prohibit certain products and raw materials; rapid inflation in health care costs and assumptions used in determining health care cost estimates; risks associated with foreign operations including political unrest and fluctuations in exchange rates of foreign currencies; prolonged work stoppage resulting from labor disputes with unionized workforce; changes in and compliance with pension plan funding obligations; stock price volatility; infringement or loss of the Company's intellectual property; litigation and claims against the Company related to products, services, contracts, employment, environmental, safety, intellectual property and other matters; adverse litigation judgments or settlements; absence of or inadequacy of insurance coverage for litigation judgments, settlements or other losses; availability of financing at anticipated rates and terms; and loan covenant default arising from substantial debt and leverage and the inability to service that debt, including increases in applicable short-term or long-term borrowing rates.
For further information on risks and uncertainties, see the Company's Form 10-K and 10-Q filings with the Securities and Exchange Commission.
OMNOVA Solutions is a technology-based company with pro forma sales for the twelve months ending August 31, 2011 of $1.2 billion and an active global workforce of approximately 2,700. OMNOVA is an innovator of emulsion polymers, specialty chemicals, and decorative and functional surfaces for a variety of commercial, industrial and residential end uses. Visit OMNOVA Solutions on the internet at www.omnova.com.
SOURCE OMNOVA Solutions