Armstrong Flooring faces deadline to sell or refinance business 

Ioannis Pashakis//March 11, 2022

Armstrong Flooring faces deadline to sell or refinance business 

Ioannis Pashakis//March 11, 2022

Following its announcement last year that it was looking to sell the company, Lancaster-based Armstrong Flooring wrote in an annual report that it will need to either sell the company or refinance to stay solvent. 

In its annual 10-K form submitted to the U.S. Securities and Exchange Commission, Armstrong Flooring wrote: “failure to complete a sale of the company or to obtain sufficient financing could adversely affect our ability to achieve our business objectives and continue as a going concern.” 

In the report, Armstrong Flooring lists several risks the company is currently facing, including the possibility that it may not reach an agreement of sale, stating that “there can be no assurance that we will reach agreement on any sale of the company or any other strategic transaction.” 

The flooring manufacturer reported a loss of $53 million in 2021, adding to the company’s accumulated deficit of $356.2 million. The report states that Armstrong Flooring’s auditor has raised substantial doubts about its ability to continue. 

“The Report of Independent Registered Public Accounting Firm on our consolidated financial statements includes an explanatory paragraph related to our recurring losses from operations and notes the ability of the company to continue as a going concern is dependent on the company maintaining adequate capital and liquidity to fund operating losses until it returns to profitability or is sold,” the company wrote. 

If Armstrong Flooring is unable to sell the company, it will need to refinance by June 30, according to the report. 

Armstrong Flooring operates seven manufacturing plants in three countries and employs over 1,500 people. 

The company became independent in 2016 after splitting from Armstrong World Industries. As part of the split, Armstrong Flooring took ownership of Armstrong World’s resilient flooring and wood flooring segments. 

Armstrong Flooring sold its wood flooring business in 2018. 

It announced that it would be looking for a buyer on Dec. 31, 2021 and that it had amended its ABL Credit Facility and Term Loan Facility and would be receiving an additional $35 million aggregate principal amount of term loans from its term loan lender, Pathlight Capital LP. 

Armstrong Flooring wrote in the report that its credit agreements contain covenants that impose significant operating and financial restrictions and the failure to comply with those covenants could impact its access to liquidity. 

Other risks currently facing the company include certain business lines and markets depending on a small number of key customers, supply chain issues and a highly competitive flooring market. 

The company stated in a separate report that it will not be responding to questions regarding its financial and operational performance, or the sale of the company.