PolyOne to use divestiture proceeds to pay $194 million revolver debt

By Devika Patel

Knoxville, Tenn., Oct. 22 – PolyOne Corp. plans to use the about $600 million of after-tax proceeds from a planned divestiture to repay all $194 million of borrowings under its revolver.

The company announced on Aug. 19 that it intended to divest its performance products and solutions segment and confirmed in a Monday earnings press release that the sale process is on track and the transaction is expected to be completed in the fourth quarter.

“The divestment of PP&S is expected to close soon, which will reduce our exposure to more cyclical end markets and strengthen our balance sheet,” chairman, president and chief executive officer Robert M. Patterson said in the Monday release.

“We will immediately put the cash proceeds to work in paying down the revolver balance,” executive vice president and chief financial officer Bradley C. Richardson said on the company’s third quarter ended Sept. 30 earnings conference call on Tuesday.

“It’s about $194 million on the ABL right now.

“That will be paid down.

“There will be some remaining cash that sits on the balance sheet, at least for the time being, with the expectation that we can put that to use to support our growth initiatives,” Richardson said.

With the cash on the balance sheet and the revolver paid down, management expects leverage to fall to around 2x.

The company is comfortable taking leverage up to 3x for the right growth opportunity, but would want to take its leverage back down again following such an acquisition.

“With respect to leverage, our view on that is conservative,” Richardson said.

“We’ve said that for the right acquisition we can certainly take leverage above 3x.

“Obviously, with the sale of PP&S and cash on the balance sheet, we’ll be sitting around 2x, so that’s pretty low from where we’ve been historically.

“To the extent that we’re going above that, obviously we’ve got to have a line of sight to getting back down below that number again in the event that we do an acquisition,” Richardson said.

Cash and cash equivalents were $199.6 million as of Sept. 30, 2019, compared to $170.9 million as of Dec. 31, 2018.

Long-term debt was $1,406,300,000 as of Sept. 30, 2019, compared to $1,336,200,000 as of Dec. 31, 2018.

PolyOne is an Avon Lake, Ohio-based provider of specialized polymer materials, services and solutions.

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