Armstrong Plans To Create New Stock

Lancaster, PA, Aug. 9--One change in ownership for Armstrong World Industries already is planned. And that may not be the only one, the company's top executive acknowledged, according to a report in the Lancaster New Era. The newspaper reported that Armstrong's plan for emerging from bankruptcy--expected to occur by year-end--includes canceling its current stock and replacing it with a new stock. About two-thirds of that new stock would go to a newly formed trust, established to pay the tens of thousands of asbestos personal-injury claims that pushed Armstrong into bankruptcy. Whether the trust chooses to keep its majority stake in Armstrong or sell it remains to be seen, said Michael D. Lockhart, Armstrong chairman and chief executive officer. A sale is "possible," he said in a recent interview, though he said he was unable to estimate its probability. "The trustees (who will run the trust) may decide that they'd like to liquidate their stock to diversify their holdings," said Lockhart. "Our job is to present them with what the alternatives are and help them evaluate those alternatives in an objective way, and one of the alternatives is to sell Armstrong," he said. The other, said Lockhart, is to let Armstrong continue pursuing its current strategy of becoming a larger, more diversified provider of building products. Ultimately, the trustees will have to compare Armstrong's ability to generate cash and profits as an independent company versus what a sale would generate, he said. "The challenge for all of us here is to show that the independent route has a better return," said Lockhart, saying Armstrong is striving to cut costs and introduce distinctive new products. "That's a challenge for everybody in the business--to show what we can do in the marketplace in terms of sales and how we can become more cost effective in running the business. "That will give us the maximum amount of (profits) and growth, and then you can compare that to what happens if you sell the company," he said. Armstrong also confirmed Friday that another senior executive has left the company. April Thornton, senior vice president and chief marketing officer, had her job eliminated as part of a corporate streamlining effort, company spokeswoman Dorothy Brown Smith said. Thornton becomes the second of Armstrong's top five executives to leave in ten days. Chan Galbato, who oversaw Armstrong's floor products, had his job eliminated July 30.