Armstrong Flooring faces a new deadline to find a buyer | Local Business
Armstrong Flooring Inc. is reviewing offers from “several potential buyers” as it received an extension from lenders to finalize a sale, according to documents filed with the Securities and Exchange Commission Thursday.
The East Lampeter Township-headquartered company must enter into a definitive binding purchase agreement, merger agreement or other similar agreement by no later than May 2. The deal must close on or before June 15, according to the amended loan agreement. Previously, the deadline to close was May 15.
Armstrong employs about 500 locally.
The 160-year-old company’s ability to continue depends on completing a sale or refinance no later than June 30, it has said in a March 9 report filed with the Securities and Exchange Commission.
The company sought and received an extension from its lenders so it could review potential offers, according to an amendment to its loan agreement.
Armstrong has hired investment bank Houlihan Lokey Capital Inc. to assist with a process for the sale of the company and with the consideration of other strategic alternatives.
Armstrong did not disclose its potential suitors.
“The company received confidential, non-binding expressions of interest from several parties in connection with the sale process,” Armstrong wrote in its most recent notice to the SEC this week. “After careful review and consideration, the board of directors of the company has instructed the company’s management and advisors to pursue implementation of those expressions of interest which the board believes are most likely to maximize the value to be realized by the company’s stakeholders, subject to further negotiation and documentation.”
In its March 9 SEC filing, Armstrong said it would not be making any further disclosures or holding calls with investors until the sale or other “strategic alternative” is completed. It did not issue an earnings release. The company also said it would not answer any inquiries regarding its financial or operational performance, the process of the sale or other strategic alternatives.
In January, the company announced it had amended its term loan with private credit investment management firm Pathlight Capital LP to provide an additional $35 million to give it “financial flexibility to pursue its operational and strategic goals.”
The company expressed doubt it could continue past June 30 due to continuing supply chain disruptions and continued inflationary pressures related to transportation, labor and raw materials which are expected to continue through 2022, the company said in the March 9 SEC filing.
For the year ended Dec. 31, Armstrong Flooring reported a net loss of $53 million, despite a 11% increase in sales revenue. As of Dec. 31, the company had an accumulated deficit of $356.2 million and a total debt of $111.3 million, with $110 million due June.
Armstrong has struggled with four straight years of losses since it shed its hardwood flooring division in December 2018.
Last year, it sold its Los Angeles-area plant for nearly $77 million and moved its headquarters and technical center, another cost-saving move. It relocated its headquarters and technical center to Greenfield in East Lampeter Township. Armstrong Flooring was spun off from Armstrong World Industries in 2016, a move that left Armstrong Industries with the far more profitable ceilings business.
Armstrong reported it had 1,568 employees globally as of Dec. 31, with 1,172 in the United States. In December 2020, it had around 1,500 employees, including 500 in Lancaster. The remainder are in Canada, Australia, China, the Philippines, Singapore and Vietnam.
Armstrong Flooring debuted with around 3,700 employees, including 750 between its Dillerville Road floor plant and its former Columbia Avenue headquarters.
Armstrong Flooring operates seven manufacturing plants in three countries. Two plants are in Pennsylvania, one in Lancaster city and one in Beech Creek Township, Clinton County. There are plants in Illinois, Mississippi, Oklahoma and one plant each in China and Australia.