The Other Side of Armstrong’s Vacated Plant
Lancaster County, PA, November 18, 2005--In late October, officials enthusiastically unveiled an agreement to revitalize the vacated section of the Armstrong floor plant, according to the Lancaster New Era.
Some 41 acres shut down by Armstrong would become badly needed space for Franklin & Marshall College and Lancaster General Hospital.
Officials praised Armstrong for helping to salvage the idle portion of its Liberty Street site and fuel the ongoing renaissance of the city’s northwest quadrant.
But lost in the excitement of a potential $150 million redevelopment was a key part of the whole project:
This is a great deal for Armstrong World Industries too, giving the company a sound way of disposing a sprawling, useless and contaminated site.
The upside for Armstrong was disclosed in a 13-page filing this week in U.S. Bankruptcy Court, asking the court’s permission to divest the land.
In making its case in favor of the transaction, Armstrong said the deal will generate the “best value” for the company and its creditors.
Making that possible, the company added, is a “unique confluence” of events.
There’s two neighboring institutions who need room and are willing to share the cost of readying the land for redevelopment, plus a non-profit group willing to guide the complicated process and seek public funds for it.
And there’s a wave of redevelopment sweeping through that entire part of the city, injecting new life into long-vacant parcels and buildings.
“The transaction will allow Armstrong to divest non-productive, negative-value property which, given its prior use, materials, age and structural design ... is not adaptable for modern-day reuse,” the company said in its filing.
Later in the filing, the company elaborated:
“Armstrong does not believe it will be able to find another party willing to provide the same value to Armstrong, particularly in light of the unique confluence of events that have made the current transaction feasible.”
With the rising tide of renewal in the Northwest quadrant, there’s “a unique opportunity for Armstrong to transfer the property at a cost less than the net present value of (its) carrying costs while also participating in the historic revitalization of Lancaster City and thereby helping to improve the area that’s been Armstrong’s home for close to 100 years.”
Subject to bankruptcy court approval, the deal calls for Armstrong to sell the 41 acres to a non-profit economic development group, EDC Finance, for $1. EDC then will sell 26 acres to F&M and 15 acres to LGH.
Armstrong, F&M and LGH each are expected to contribute as much as $6 million toward the cost of preparing the acreage for new use.
Public funds are expected to cover the rest of that expense, a sum that could reach $35 million, officials said last month.
That three-year effort will involve demolishing nearly 200 archaic buildings on the site, cleaning up chemical contamination and constructing new infrastructure (utilities and streets).
As was previously reported, Armstrong will stop production of commercial flooring at the 99-year-old plant, idling 450 workers, the latest in many downsizing actions there.
It will make just residential flooring there, using 19 acres on the site’s northwest section, and close off the 41-acre section. Armstrong is spending $8 million on the conversion.
Because Armstrong is in bankruptcy, it needs the court’s approval of major transactions such as land sales. Armstrong entered bankruptcy in 2000 to resolve nearly 200,000 asbestos lawsuits.
Armstrong has won court approval for three other land divestitures in the county while in bankruptcy.
A hearing on the floor plant deal is set for Dec. 19 at 11:30 a.m. in U.S. Bankruptcy Court, 824 Market St., Wilmington, Delaware.
Related Topics:Armstrong Flooring