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Armstrong Chapter 11 - Confirmation Announcement


ESTABLISHMENT AND FUNDING OF TRUST PURSUANT TO 524(g)
  • Pursuant to the Plan, AWI will establish a trust in accordance with the provisions of section 524(g) of the U.S. Bankruptcy Code to satisfy all current and future asbestos personal injury claimants (the “Trust”).
  • AWI will fund the Trust by making a one-time contribution of a combination of cash, notes and common stock of the reorganized AWI.  Based on the Plan’s estimated value of the stock of reorganized AWI, the distribution to the Trust will have a value of approximately $1.8 billion. 
  • Those assets will be administered by the Trust’s trustees and used to pay asbestos claims in accordance with the provisions of the Plan.  Reorganized AWI will have no role or responsibility in the administration of the Trust.
  • Pursuant to the Plan, all present and future asbestos personal injury claims must be asserted against the Trust, and all other asbestos claimants will be permanently enjoined from pursuing their claims against reorganized AWI

 

DISTRIBUTIONS TO CREDITORS

  • The Plan provides for unsecured creditors to receive pro rata distributions on account of their allowed claims through a combination of cash, notes and common stock of the reorganized AWI.  Based on the Plan’s estimated value of the stock of reorganized AWI, unsecured creditors are expected to receive distributions equal to approximately 59.5% of their allowed claims.

 

CANCELLATION OF STOCK

  • Current shareholders of AWI’s parent company, Armstrong Holdings, Inc. (“AHI” – OTC Bulletin Board: ACKHQ), do not receive any distributions under the Plan.  Following AWI’s emergence, AHI is expected to dissolve.

 

EXIT FINANCING

  • AWI does not need financing to fund the Trust or other distributions to be made under the Plan.  However, AWI has the option under the Plan to obtain financing from external sources and to distribute the proceeds of such financing instead of the Plan Notes that would otherwise be issued to the Trust and unsecured creditors under the Plan.
  • In addition, AWI will put in place a new credit facility upon emergence in order to have access to adequate working capital to support the company’s ongoing business activities.
  • In either scenario, AWI would emerge from Chapter 11 with less debt than when it entered Chapter 11 and having completely resolved its asbestos liability. 
  • The fact that AWI will emerge with a solid capital structure, combined with its recent financial performance, means that AWI will be on strong financial footing with good prospects for continued growth and profitability going forward.