AHF & Gordon Brothers to Acquire North American Armstrong Assets
Lancaster, PA, July 11, 2022-Armstrong Flooring announced on July 10 that it has entered into a binding Asset Purchase Agreement with a consortium of buyers consisting of AHF and Gordon Brothers pursuant to which these buyers will acquire substantially all Armstrong Flooring’s North American assets for $107 million in cash and assumption of specified assumed liabilities. This binding Asset Purchase Agreement was the culmination of the company’s Chapter 11 auction process for its North American assets.
Gordon Brothers is a private equity liquidation company that was heavily involved in the liquidation of Toys R Us.
Armstrong’s Australian assets will be purchased by the McKendrick family, which sold Godfrey Hirst to Mohawk in 2017 for $450 million, and the China assets will be sold to a Chinese company.
The AHF and Gordon Brothers consortium would acquire substantially all of the assets of North America. AHF plans to continue operating the Lancaster, Kankakee and Beech Creek locations, and the company would pursue an orderly winddown of its Jackson and Stillwater locations on July 15. Pending consummation of the sale of its North American assets, which is scheduled for July 22, Armstrong Flooring will continue to operate as usual in all North American geographies and remains committed to its customers and other stakeholders.
AHF plans to operate the Lancaster, Kankakee, and Beech Creek locations. The Lancaster facility produces commercial sheet and commercial LVT, and Beech Creek manufactures print film for the Lancaster location. The Kankakee, Illinois factory produces VCT and peel-and-stick residential products.
One of the causalities is Armstrong’s Stillwater factory, which will close; the location produces heavy-duty commercial products.
The proposed transactions are the outcome of a court-supervised auction that commenced on June 27, 2022 during which the bid from the AHF and Gordon Brothers consortium was the sole binding bid received for substantially all of the North American assets. The proposed transactions are subject to Bankruptcy Court approval, as well as regulatory approvals and customary closing conditions.
“We have been working hard to execute an efficient and value-maximizing sale of the business while keeping the best interests of our valued stakeholders at the forefront of all that we do. In light of the agreement we have reached with AHF and Gordon Brothers, and the agreements we are close to signing with the buyers of the Chinese and North American businesses following consummation of the auction, Armstrong Flooring is now one step closer to achieving that goal,” said Michel Vermette, president and chief executive officer. “We had hoped to identify a buyer for the entire business and avoid any closures of our facilities; however, based on the options available to us, we believe this is the best possible path forward for our business. This reflects the support of our ABL lenders, creditors and other key stakeholders, and has been approved by our board of directors. While we cannot speak on behalf of the proposed buyers, we are encouraged that they see the potential of the company in the markets we serve and understand the role our people play in driving the business forward.”
The proposed North American sale transaction will be heard at a U.S. Bankruptcy Court hearing currently scheduled for July 12, and the sale transactions for the Chinese and Australian businesses also will be heard at the time provided the auction is closed in time.
The "Armstrong" brand name is owned by the ceilings company; the businesses were split in 2015. While AHF has ownership of many of Armstrong’s sub-brands, at this point, it is unclear whether the company will be able to use “Armstrong” for its flooring products.
Listen to the interview with Bruce Zwicker for more information here.