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This aerial view shows Armstrong Flooring's Lancaster city plant at 1067 Dillerville Road on Friday, July 8, 2022.

This aerial view shows Armstrong Flooring's Lancaster city plant at 1067 Dillerville Road on Friday, July 8, 2022.

Armstrong Flooring and AHF Products’ $107 million deal would put Armstrong’s approximately 600 workers at its Lancaster County warehouse, factory and headquarters in the hands of West Hempfield Township-based AHF. 

Here is what we know so far: 

That is not clear. According to the sale agreement filed in Delaware bankruptcy court, AHF is expected to make offers to employees it wants who will transfer from Armstrong Flooring after applying for AHF positions. Those employees who don’t receive an offer will be laid off as of July 22. As of May 20, there were about 215 union workers and about 390 assigned to the headquarters.

AHF President and CEO Brian Carson said in an email to LNP|LancasterOnline on on Monday, "At Kankakee, we are continuing production of VCT (vinyl composite tile), residential tile and Alterna. At Lancaster, it’s residential and commercial LVT (luxury vinyl tile) and residential sheet vinyl (CVL).

"We will be hiring people for these plants, sales and headquarters that are necessary to enhance our current operation.

"AHF Products intends to bring on the majority of current AFI plant employees at these three plant locations in order to maintain production. We also are confirming that the union collective bargaining agreements will follow transferred employees who are currently in the union and hired by AHF Products with only a few contract modifications which have already been discussed and agreed upon with the unions."

Yes. If the sale agreement is approved by a judge after Tuesday’s sale hearing, the workers that are transferred to AHF would continue to be represented by their respective unions, the United Steelworkers and International Association of Machinists and Aerospace Workers. The settlement calls for a $500 retention bonus for union workers who stay for 30 days past the closing date. 

In a statement announcing the agreement of sale, Carson said AHF sees an opportunity for growth of his young company. AHF started as a spin off of Armstrong Flooring’s hardwood flooring segment and over the last three years it has made strategic purchases to diversify in the residential and commercial flooring segments in hardwood, resilient and laminate.

In an interview with Floor Trends Magazine, Carson said AHF’s acquisition by private equity fund Paceline gave AHF access to capital to grow. The flooring business is booming, he said.

He told the magazine in February that AHF was looking to get suppliers closer to home and from less-disrupted parts of the world. 

  “We’re investing in automation and plants, in material handling in the plants to reduce the dependency on labor,” he told Floor Trends.

The agreement is final and binding but a judge has to approve it. A sale hearing is currently set for 10:30 am. Tuesday. The judge doesn’t have to approve the sale during that hearing but both AHF and Armstrong Flooring said in the settlement they want the sale to close “expeditiously.”.

July 22, barring any unforeseen legal problems. Armstrong Flooring has been working with companies to settle outstanding debts for certain contracts that will be assumed by AHF. 

After the sale hearing on Tuesday, the closing is set for July 22. In between, the court has scheduled what is called an omnibus hearing for Monday. There is no agenda for it yet but the date is set aside for unresolved matters. Once the sale is complete, Armstrong Flooring will settle its debts. The bar date, Aug. 5, is when all non-government credit claims must be submitted. Government entities have until November to submit claims. 

It is not clear what, if anything, stockholders will receive. The company owes an estimated $318 million, including $160 million in long-term debt, which is secured by the properties it owns. Armstrong Flooring valued its assets at $517 million when it filed for bankruptcy protection but is expected to receive about $197 million in the sale of the North American and Pacific Rim assets, once it is approved.

There is still a matter to be resolved in court as the nonunion retirees continue to seek their benefits. The matter will be heard by the bankruptcy judge on Tuesday. 

Under a settlement with Armstrong Flooring, the judge gave an interim order that retiree health benefits owed to USW-represented and IAM-represented retirees, surviving spouses, and other dependents shall be continued until July 31, or when the nonunion retiree benefits are stopped, whichever is later. Armstrong Flooring has made its monthly premium payment under the retiree life insurance policy due June 30. 

Armstrong Flooring announced Monday that Giant Group, also known as Zhejiang GIMIG Technology Co., Ltd,  will acquire the equity interests in the company’s Hong Kong holding company subsidiary, including all associated operations for $59 million, and Cowes Bay will acquire substantially all of the company’s Australian assets for $31 million plus assumption of specified liabilities.

Giant Group is a company specializing in rigid vinyl flooring based in southeastern China. Cowes Bay Group is a 2-year-old private investment firm based in Melbourne, Australia.

The Chinese and Australian businesses will continue to operate as usual pending consummation of the respective sales. The proposed transactions are subject to bankruptcy court approval, as well as regulatory approvals and customary closing conditions. They will be heard in a sale hearing currently scheduled for Tuesday.

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