LANCASTER, Pa. - Armstrong World Industries, Inc. today announced that its Board of Directors is considering the payment to shareholders of a special cash dividend of approximately $500 million in the aggregate.
"This approach is a proactive way to efficiently allocate the Company's capital and return value to shareholders at time when conditions in the capital markets are favorable," said Matt Espe, President and CEO.
The special cash dividend of approximately $8.55 per share to Armstrong's common shareholders would be funded in part by surplus cash on the Company's balance sheet, and in part by an additional $250 million of debt that the Company is looking to raise in the term loan B market via an expansion of its existing senior credit facility, market conditions permitting. This would increase the amount of the senior credit facility from $1.05 billion to $1.3 billion.
The declaration of a special cash dividend is conditioned on the Company's ability to receive consent from current lenders permitting the payment, and obtaining the requisite debt financing on satisfactory terms and conditions. The Company currently expects that any special cash dividend would be declared and paid before May 1, 2012.
In considering the proposed special dividend, the Board of Directors is evaluating a number of factors, including the current state of the capital markets, the Company's current leverage and the likely effects of increased leverage on the Company's ability to pursue its strategic initiatives, and the Company's ability to generate cash flows to service the Company's increased debt and to fund operations.
"Given the Company's cash generation and earnings progress achieved in 2011, we are below our target leverage of 2 to 3 times net debt/EBITDA, and this contemplated action would help to return us to a more efficient capital structure," said Tom Mangas, Senior Vice President and CFO.
Source: Armstrong World Industries, Inc.
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