Fitch: Noveon on positive watch

Fitch Ratings said it has placed the ratings of Noveon Inc. on Rating Watch positive following the announcement of a proposed merger with Lubrizol Corp. Fitch currently rates Noveon's senior secured credit facility at BB- and its senior subordinated notes at B.

On Friday, Lubrizol announced the signing of a definitive agreement to purchase Noveon International Inc., Noveon's parent company. The combined entity would have estimated revenues of $3.2 billion and EBITDA of $473 billion based on 2003 results for Lubrizol and Noveon.

Lubrizol intends to make a cash payment of $920 million to Noveon's equityholders and assume approximately $920 million of net debt. Total debt at closing is estimated at $2.1 billion.

Fitch said the positive Rating Watch reflects Fitch's expectation of greater support for Noveon debt from the combined entity's EBITDA and cashflow and the likelihood of future debt reduction.

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