400 jobs on the balance sheet as Armstrong Flooring bankruptcy approaches Local business
The fate of about 400 local jobs on Monday remained uncertain as Armstrong Flooring Inc. told investors it was likely to file for bankruptcy after he failed to find a buyer for the company headquartered in East Lampeter Township.
Meanwhile, Armstrong Flooring hired a consultant for $ 815 an hour to give advice on what is described as cash management, bankruptcy and strategic alternatives. The average salary of employees in 2021, according to before the filing of the SECamounted to $ 56,826.
The company faced a deadline on Monday imposed by creditors to conclude a final binding purchase agreement, a merger agreement or other similar agreement. The 160-year-old’s ability to continue operations depends on the completion of the sale or refinancing no later than June 30, it was said earlier.
According to Alison van Harskamp, director of corporate communications, Armstrong employs about 420 people between factories and corporate offices in Lancaster County. This is about 80 people less since December 2020.
It is unclear how the financial situation affects or will affect employees. Could not get comment from representatives of United Metalworkers Union Local 285, which represents about 180 workers. After the blockade and negotiations, the last contract of the union was valid from 2019 to February 2022, according to the LDL archives. In March, the union ratified a new three-year contract. Details were not available.
A memo from Armstrong’s management to employees, received by LNP, instructed employees to send all media inquiries to corporate communications without comment. It says that employees who work with customers and suppliers will be given “resources” to answer questions.
“Please be assured that if we begin to file a defense under Section 11, we will file certain motions in court that will allow us to proceed to Section 11 without disrupting our normal course of business, including benefits and wages.” wrote Harskamp on behalf of. Michel S. Vermet, President and CEO in a note to staff. “To be very clear, we continue to believe in the value and brand of Armstrong Flooring and remain firmly committed to our customers, suppliers – and most importantly – our employees.”
Important for Lancaster County
Lisa Riggs, president of Lancaster County Economic Development Company, said it was too early to say what impact Armstrong Flooring’s financial position would have.
“We continue to monitor this very closely and keep the lines of communication open when they move in this very difficult circumstance,” Riggs said. “We hope they find a solution that will keep the plant and staff here.”
Riggs said Armstrong is an important business with deep roots in the county. She said the EDC has no tools at the local level that would affect Armstrong’s decision, but the Economic Development Organization conveyed how important Armstrong is to the county.
Said Armstrong in its submission to the SEC there are interested buyers, but by Monday she had failed to complete the deal. He has been negotiating an extension and he now has until May 8th.
Armstrong Floring said that “at the moment it seems unlikely that any of the parties expressing interest in a deal with the company will be able to sign a final purchase agreement, merger agreement or other similar agreement” on May 8 or earlier.
It is unclear whether creditors will agree to a further extension after May 1, Armstrong Flaring said in a statement to the Securities and Exchange Commission.
“Armstrong Flooring has received a delay from our creditors until May 8 to assess the best path for business,” Harskamp, director of corporate communications, said in an email. “Although a final decision on how we will move forward has not been made, we are considering all available options, including seeking protection to complete the transaction through the process in Chapter 11. Armstrong Flooring is open to business and operating normally. We will provide an update when there is news to share. “
Armstrong said in a statement to the SEC that no action had been approved by the board of directors, but based on the state of discussions with the company’s creditors and the company’s liquidity needs, it is likely that the company will seek bankruptcy protection. in accordance with Chapter 11 and will seek to conduct one or more such transactions through a competitive sale process in bankruptcy.
Chapter 11 Bankruptcy allows a company to stay in business and restructure its liabilities. Armstrong said it would seek to sell the company in one or more deals through a competitive sale process in the event of bankruptcy.
“If the company seeks protection from bankruptcy, the holders of our equity securities are likely to be entitled to a small recovery of their investment, and the return to other stakeholders cannot be determined at this time,” Armstrong said in a statement. .
In the case of bankruptcy in section 11, the debtor usually remains “in possession”, has the powers and duties of a trustee, may continue to operate and may, with the permission of the court, borrow new money. A reorganization plan is proposed, creditors whose rights are affected can vote on it, and the plan can be approved by a court if it gains the necessary votes and meets certain legal requirements.
$ 815 per hour consultant
Armstrong Flothe board of oring has appointed Dalton Edgecomb of Riveron Consulting LLC CEO for Transformation with a price of $ 815 per hour starting May 1. He was hired to assist in the company’s cash management processes and advise on any bankruptcy proceedings and explore strategic alternatives. Failed to contact Edgecomb for comment.
Since November 2020, Edgecomb, a declared expert in restructuring and restructuring, has been the senior managing director of Riveron Consulting LLC, a national business consulting firm specializing in accounting, finance and operations. Riveron will also be entitled to reimbursement at fixed hourly rates for the services of other Riveron staff, as well as reimbursement of reasonable own costs incurred in connection with participation.
The New York Stock Exchange briefly suspended trading in shares of Armstrong Flooring at 8 a.m. Monday. About a year ago, the shares were worth $ 5.71 per share. By the end of trading on Monday, shares closed at 40 cents per share.
In 2019, Armstrong Flooring blocked union workers for nearly two months at its plant in Dillerville Road due to a contract dispute. The union eventually ratified a two-and-a-half-year contract that provided for additional payments of $ 1,500 annually to one-time Level 1 workers, a 2% increase for Level 2 workers and a 2.5% increase for Level 3 workers. Levels were established for years of service.
In January, the company announced it had changed a term loan from private equity firm Pathlight Capital LP to provide an additional $ 35 million to give it “financial flexibility to achieve its operational and strategic goals.”
Armstrong has hired investment bank Houlihan Lokey Capital Inc. to assist in the process of selling the company and considering other strategic alternatives.
She has not disclosed her finances since early March, when she reported for 2021.
For the year ended Dec. 31, Armstrong Flooring reported a net loss of $ 53 million, despite an 11% increase in sales revenue. As of December 31, the company had an accumulated deficit of $ 356.2 million and a total debt of $ 111.3 million, with $ 110 million as of June.
Armstrong has suffered losses for four years in a row after abandoning the hardwood division in December 2018.
Last year, it sold its Los Angeles plant for nearly $ 77 million and relocated its headquarters and technical center, which was another step in cost savings. He moved his headquarters and technical center to Greenfield, East Lampeter. Armstrong Flooring was merged with Armstrong World Industries in 2016, leaving Armstrong Industries a much more lucrative business on the ceiling.
Armstrong said that as of December 31, there were 1,568 employees worldwide, including 1,172 in the United States. In December 2020, it had about 1,500 employees, including 500 in Lancaster. As of Monday, the company said it had 420 employees in the county. The rest are in Canada, Australia, China, the Philippines, Singapore and Vietnam.
Armstrong Flooring debuted with approximately 3,700 employees, including 750 between its flooring plant on Dillerville Road and its former headquarters on Columbia Avenue.
Armstrong Flooring operates seven manufacturing facilities in three countries. Two plants are located in Pennsylvania, one in Lancaster and one in Beach Creek, Clinton County. There are plants in Illinois, Mississippi, Oklahoma and one plant each in China and Australia.