Potential Buyer/s for Armstrong to Be Revealed June 29
Lancaster, PA, June 28, 2022-The potential buyer of part or all of Armstrong Flooring is expected to be revealed Wednesday, the same day a bankruptcy judge is set to hear testimony from unions, retirees and creditors trying to stop or change terms of the sale, reports Lancaster Online.
“On Monday it was revealed that at least two potential buyers are interested in purchasing all or some of the company to keep [it] in business. In a court filing, East Lampeter Township-based Armstrong Flooring disclosed that it has shared with the United Steelworkers lawyer ‘information about going-concern bids that affect a facility covered by a collective bargaining agreement to which USW is party.’
“A going-concern means a buyer would want to continue operating the company or piece of the company it buys.
“The United Steelworkers and International Association of Machinists and Aerospace Workers are consultation parties in the bidding process.
“Armstrong Flooring also shared bids with a committee of its retirees, some of whom continue to receive benefits such as health care through the company, it said in its court filing. As “consultation parties” the unions and retirees are expected to maintain confidentiality of the bid process.
“Monday was set as the date to begin an auction for the bids. In the afternoon the company said in a court filing that an auction for its assets was still going on. The company is expected to present the bid it wishes to accept, and explain why it is the best bid, in a bankruptcy court hearing set for Wednesday. Delaware bankruptcy court judge Mary Walrath must approve any sale, and there is no specific timeline for her to render a decision. However, Armstrong has said it will run out of money and would likely have to cease operation by July 7.
“Last week the unions representing 289 Armstrong Flooring Inc. workers in Lancaster County and Jackson, Mississippi, filed an objection to the sale, aiming to maintain some bargaining power as the company moves through bankruptcy.
“In court filings Monday, the company responded to the union’s objection to the sale, saying there is not enough money to continue to pay for the contract, benefits and retiree benefits past the sale.
“The company said the ongoing auction could change circumstances but as of the filing the company had no free cash flow, substantially all of its assets - including its cash - are encumbered; no bid entering the auction offered enough money to repay the company’s pre-bankruptcy and post-petition secured indebtedness as well as assume retiree benefits.
“The company owes an estimated $318 million, including $160 million in long-term debt, and sought protection from lenders through bankruptcy. It received court approval to sell off its assets it values at $517 million.
“It has financing until July 7 when $24 million to its lenders comes due and it still has to negotiate a wind-down budget.
“The bidding process, which was approved by a judge, allows the company some flexibility under bid procedures to adjust and continue to negotiate ‘in consultation with the relevant parties,’ the company said last week. The secrecy around bids prior to auction protects potential buyers who may be competitors and not want to reveal information contained in its bid proposal.”
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