After spending half a decade in bankruptcy protection, Armstrong World Industries emerged Oct. 2 seeking $1.1 billion of exit financing. The facility includes a five-year, $300 million revolver; a five-year, $300 million "A" term loan and a seven-year, $500 million term loan "B." Price talk is LIBOR plus 1 1/2% on the pro rata and LIBOR plus 2% on the term loan "B." There is also a commitment fee for unutilized funds on the revolver at a rate per annum of .375%.
One investor who looked at the credit turned it down purely because of the coupon. He said the spread would have to be "significantly more" for his firm to have any interest in it. Syndication is expected to close on or around Oct. 16, and is led by a syndicate of banks including: Bank of America as the administrative agent, JPMorgan and Barclays Capital as co-syndication agents and LaSalle Bank National Association and Scotia Capital as co-documentation agents, according to a filing with the Securities and Exchange Commission.
Armstrong filed for bankruptcy in December 2000 to resolve its liability for asbestos personal injury claims. The company has since had several quarters of improved financial performance, including doubling its operating income from $36.6 million to $72.5 million for the second quarter in the past year. The company has also established a trust to resolve all current and future asbestos personal injury claims, according to a release.
Moody's Investors Service assigned a Ba2 rating to all tranches of the Armstrong credit and gave it a Ba3 probability-of-default rating. Based in Lancaster, Pa., Armstrong is a designer and manufacturer of floors, ceilings and cabinets, and operates in 12 countries. Calls to an Armstrong spokeswoman were not returned.
Although Armstrong's existing debt did not trade actively, another company affected by asbestos claims saw its debt trade up. W.R. Grace & Co.'s revolving credit facility traded up a point to 144-146. A dealer said Armstrong's bankruptcy emergence has given hope to investors that W.R. Grace, which has also been plagued by asbestos liabilities, will be able to come out of bankruptcy soon. A W.R. Grace spokesman did not return a call seeking comment.