Armstrong Secures $24M Loan to Finance Operations Amid Reorganization

Lancaster, PA, May 17, 2022-Armstrong Flooring Inc. has secured $24 million in loans that will keep it operating as it reorganizes and pursues a sale of its assets, the company’s attorneys told a Delaware bankruptcy judge Monday, reports Lancaster Online.

“The loans will come from Armstrong Flooring’s pre-bankruptcy lenders, Bank of America N.A. and Boston-based Pathlight Capital, which had been pressing for repayment that Armstrong Flooring feared would lead to an immediate shutdown. Armstrong had turned to JMB Capital Partners Lending LLC of California for $30 million debtor-in-possession financing.

“Armstrong still has to pay $675,000 in fees to JMB Capital.

“The debtor-in-possession financing order is pending a 9 a.m. deadline Tuesday for any objections. The financing is needed in order for Armstrong Flooring to avoid liquidation and keep its 420 Lancaster County workers on the job. It now has time to craft a plan to address its debts, and a hearing on those details is set for June 3. The company will also keep seeking a buyer.

“On Monday, Judge Mary Walrath heard from attorneys regarding payments to certain vendors and sealing some financial information from the public.

“Attorneys for Armstrong said in court and in bankruptcy documents that time was of the essence to keep supplies coming in and products going out to distributors and other key accounts.

“‘I understand from conversations with management, that in the past week, a number of the Debtors’ stakeholders have expressed concerns over the Debtors’ ability to continue to perform and satisfy obligations in the ordinary course,’ wrote Jeffrey Lewis, managing director of investment bank Houlihan Lokey, which has been advising Armstrong Flooring on the sale. ‘Without certainty of financing, and therefore, certainty of payment, a number of the Debtors’ vendors have, at least temporarily, stopped shipping goods.’

“The debtor-in-possession financing is a $12 million term loan and $12 million revolving credit loan. The term loan is secured by equipment, intellectual property and real estate, while the revolving loan is secured with inventory and receivables. A revolving loan is a credit that allows the borrower to withdraw, repay and withdraw again.

“The terms of the loans are more flexible than the company’s pre-bankruptcy loans.”

In addition, Yahoo Finance reports that, “Armstrong Flooring Inc. paid its top executives $4.8 million just before filing bankruptcy...

“Company chief executive officer Michel S. Vermette and at least four other managers got part of their annual incentive payments early in order to try to keep them on the job, according to court papers and regulatory filings.”