Armstrong Flooring considering proposals – Floor Covering News
(This story was recently updated with new information released by the company.)
AArmstrong Flooring’s Chapter 11 bankruptcy sale nears resolution, Michel Vermette, president and CEO, shared encouraging news in a letter to staff.
Vermette stated that there was “positive momentum” and wrote: “We have received a number of proposals to take over all or several parts of our business in continuity. These potential ‘going concern buyers’ want virtually all of our US and non-US Acquiring – and operating US operations and assets While we cannot share the value of the proposals nor the names of the potential buyers, we would like to share our enthusiasm for this positive momentum.”
In a statement sent to FCNewsAn Armstrong spokesperson said that in order to support these and other potential “going concern bidders” in completing their binding offers, Armstrong Flooring — with the support of its secured backers and the Creditors Committee — extended its bid deadline from June 14 to June 23.
Assuming more than one qualified bid has been received, which is expected, an auction will take place on June 27 to determine the highest or best bid. Once the winning bid or bids have been selected and approved by Armstrong Flooring’s board of directors, the company will present the winning bid or bids to the bankruptcy court at a hearing scheduled for June 29.
“Armstrong Flooring is open to business and remains strongly committed to our customers, suppliers and employees as we navigate the way forward,” the spokesperson said. “We are confident that this final move puts us in the best possible position to preserve and maximize value for our stakeholders.”
On May 8, Armstrong Flooring filed for voluntary Chapter 11 protection to conduct what it believes to be an “efficient and value-maximizing” sale of the company. The company, which went up for sale months before the Chapter 11 filing, owes an estimated $318 million, including $160 million in long-term debt, and sought protection from lenders through bankruptcy. Armstrong Flooring received court approval to sell its assets, which are valued at $517 million.
Bonus plan disputed
In another action, Armstrong Flooring’s unions have challenged a company’s plan to pay bonuses to mid-level executives who remain through the bankruptcy sale process, saying it is unfair to union members who could lose their contract and benefits. On May 31, Armstrong Flooring asked a bankruptcy court to approve a $745,000 retention bonus plan to keep mid-level executives on board through the sale of the company.
Armstrong Flooring estimated that the bonuses for as many as 50 “key personnel” would average $14,900 per person. The bonuses would range from 8% to 12% of the annual base salary of key people who executives and their consultants felt were important to assist in the sale and winding-up of the business.
In an appeal filed in bankruptcy court, attorneys for the United Steelworkers and the International Association of Machinists and Aerospace Workers argued that the bonuses should be denied. The unions said the bankruptcy court judge should consider the bonus plan, called the Key Employee Retention Plan, in connection with $4.8 million bonuses given to key management days prior to the bankruptcy filing. That $4.8 million payout included an accelerated payment of the long-term incentives for 2022.
The Steelworkers’ Union represents approximately 262 workers at its Lancaster, Pennsylvania, and Jackson, Miss. The IAM represents 17 Lancaster employees and approximately 1,000 retirees who currently receive health and life insurance from Armstrong.
According to the website Lancasteronline, the union noted that while Armstrong Flooring has said it wants to find a buyer who will keep the company in business, it recently sought permission from a Delaware bankruptcy judge to reject all collective bargaining agreements and suspend payment. of pension benefits. Armstrong Flooring has said it must terminate contracts because no buyer has indicated it would honor them. The company said that if buyers must abide by the contracts, it cannot close a sale.
Armstrong Flooring has informed 606 workers in Lancaster County that they could lose their jobs between now and July 1.
*Update: The following was originally published by Lancasteronline.
According to Lancasteronlinethe announcement of a potential buyer for Armstrong Flooring’s Lancaster County operations and the fate of the 606 jobs here has been pushed back as the company, which is in the midst of a sale through Chapter 11 bankruptcy, is unhappy with offers to expand its North -US assets.
Armstrong Flooring said in an email today that it has suspended negotiations with bidders for its North American assets and the company as a whole as it seeks higher and better bids. It was expected to present the best offers for all of its assets, including its North American assets, in bankruptcy court today.
Bidders for Armstrong’s North American assets will resume an auction Tuesday, July 5, to allow additional time and be consistent with Delaware bankruptcy court availability, the company said in an email statement.
“We do not intend to share details of bids or bidders beyond what is required in the tender process,” the company said. “The company will provide an update if there is any substantive news to share.”
The company owes an estimated $318 million, including $160 million in long-term debt, and sought protection from lenders through bankruptcy on May 8. It received court approval to sell its assets which it values at $517 million.
Armstrong Flooring has seven factories in three countries. Two factories are in Pennsylvania, one in Lancaster City and one in Beech Creek Township, Clinton County. There are factories in Illinois, Mississippi, Oklahoma and one factory each in China and Australia. The factories in China and Australia are not part of the bankruptcy but are part of the sale. The assets also include trademarks and intellectual property.
Armstrong Flooring said this morning it had identified a lead bidder for its Australian and Chinese assets, both of which surpassed starting bids after multiple rounds of bidding.
There were at least three bids, according to court records of creditors party to the lawsuit. High Properties, which leases its headquarters to Armstrong, noted Tuesday evening that it had not received details of the bids, as required by previous agreements.
A hearing scheduled for today is likely to be moved to next week. Until this morning, no new appointment had been made.
Armstrong Flooring faces a July 7 deadline when a $24 million loan becomes due. The loan came from Pathlight Capital and Bank of America NA to keep the company going through bankruptcy as it searches for buyers and to avoid liquidation.