ICS Magazine

Armstrong World Industries Defaults on $50 Million Note

November 28, 2000
New York (Bloomberg) -- In the first commercial paper default since 1997, Armstrong World Industries, a subsidiary of Armstrong Holdings, Inc., last Wednesday failed to repay $50 million in maturing commercial paper.

North America's largest vinyl-flooring maker faces about 173,000 pending personal injury claims in asbestos litigation and estimated its related liability through 2006 will be between $758.8 million and $1.36 billion, according to a company filing with the Securities and Exchange Commission.

The company's failure to repay the CP caused it to default on its five-year $450 million credit agreement. Armstrong Holding's stock closed down 6.25 cents at $1.125, the lowest level this year.

According to the company , it is “evaluating all the alternatives” in front of them at this point. Options include filing for bankruptcy protection, according to the company's 10Q filed on Nov. 14 for the quarter ended Sept. 30.

In a filing with the SEC last week, the company said it faced liquidity problems and may seek bankruptcy protection if it can't find additional funds to cover asbestos-related claims.