Armstrong Flooring Inc. announced late Sunday that it has agreed to sell substantially all of its North American assets to AHF Products and Gordon Brothers, the latter a global advisory company based in Boston known for liquidating assets. Armstrong originally filed for bankruptcy protection in May, 2022.
The deal, reported to be for $107 million in cash and the assumption of specified liabilities, must be approved by a Delaware bankruptcy court judge. A hearing on the sale is set for Tuesday, July 12. In addition, Armstrong Flooring said it anticipates it will also disclose the definitive purchase agreements for its Chinese and Australian businesses shortly, having received binding bids to acquire each.
As outlined by Armstrong Flooring, AHF Products and Gordon Brothers would acquire substantially all of the assets of Armstrong North America. AHF said it plans to continue operating the Lancaster, Kankakee and Beech Creek locations, and Armstrong would pursue a wind down of its Jackson and Stillwater locations on July 15, 2022. Once consummated, Armstrong Flooring will continue to operate as usual in all North American geographies.
As reported by FCNews, AHF Products, which was spun off from Armstrong Flooring in 2018, emerged as a late bidder in a bankruptcy case that was filed on May 11. “We believe this transaction represents tremendous opportunity for both AHF Products and our channel partners and continues our growth as a leader in the flooring industry,” Brian Carson, president and CEO, AHF Products, said in a statement.
Mountville, Pa.-based AHF is the largest hardwood flooring manufacturer in North America and has experienced rapid growth across a range of additional flooring categories, including vinyl plank, laminate and commercial flooring products. The company operates eight manufacturing facilities, seven in the U.S. and one in Cambodia and three domestic distribution facilities to serve customers through a multi-channel strategy that includes dealers, home centers and distributors around the world.
“Our investments in new brands, products and capabilities, both organically and through acquisitions, has fueled this growth,” Carson said. “Our strategic acquisitions have been a key driver in expanding our reach and product offering to provide our customers with industry leading commercial and residential products, including hardwood, resilient and laminate. That is, and will continue to be, our strategy moving forward.”
The proposed transactions stemmed from a court-supervised auction that began 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. Without a successful bid, Armstrong Flooring was on the cusp of closing the final chapter on a 150-year history.
“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,” said Michel Vermette, president and CEO, Armstrong Flooring. “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 Australian businesses following consummation of the auction, Armstrong Flooring is now one step closer to achieving that goal.”
Vermette added that the company had hoped to identify a buyer for the entire business and avoid any closures of its 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.”
Armstrong Flooring said it is working alongside its DIP (debtor-in-possession) lenders to enable it to continue operating its business while the buyers finalize all details and close the sale transactions.