LANCASTER, PA—Developers expecting to buy wood flooring from Armstrong Flooring will be dealing with a new vendor in 2019.

Armstrong has completed the previously disclosed sale of its Wood Flooring segment to an affiliate of private equity investment firm American Industrial Partners.

Proceeds from the sale were approximately $90 million, net of closing costs, transaction fees and taxes. The transaction is subject to a customary post-closing working capital adjustment process, which is expected to be completed in the first quarter of 2019. The company currently expects to return a portion of the net proceeds of the sale to shareholders in an amount, manner, and timing to be determined by its board of directors, after consideration of all relevant factors.

Completion of the sale permits Armstrong Flooring to intensify its focus on the fastest-growing parts of the flooring market, including Luxury Vinyl Tile and rigid core, as well as a wide range of resilient categories such as Vinyl Composition Tile, resilient sheet and its Diamond 10 line of products. This exclusive focus on resilient flooring is expected to strengthen the Company's product and end market mix while improving its ability to innovate and enhance the profitability of its portfolio.

“We are excited to enter 2019 with an exclusive focus on resilient flooring, which improves the profitability of our award-winning product portfolio,” says Don Maier, CEO. “This transaction is immediately accretive to our EBITDA margin and together with the right-sizing of our cost structure unlocks additional value for Armstrong Flooring's shareholders. This divestiture positions us well for the future, as we are now able to concentrate our efforts on attractive and growing resilient categories. Additional financial information regarding the transaction will be available to shareholders after the New Year.”

In conjunction with the closing of the sale transaction, the company also replaced its existing asset backed debt facility with a new secured credit agreement comprised of a $75 million Term Loan A and a $75 million revolving credit facility. Borrowings under the facility will bear interest at a rate of LIBOR plus a spread of 1.50% to 2.25%, depending on the Company's net leverage ratio, with an initial spread of 1.75%. The new credit arrangements have a five-year term, maturing in 2023.