After remaining stable during the regular session, shares of Armstrong Flooring, Inc. (NYSE: AFI) get traction in after-hours trading on Thursday on a definitive agreement news of selling a California property.
At close of the regular session, stock price of designer and manufacturer of innovative flooring solutions was $4.04 with a bit slip of 0.98% which rose to $5.85 after taking a leap of 44.8% in extended session.
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What prompted the rise?
Armstrong Flooring is one of the most trusted, celebrated brands in the flooring industry. Through adaptable and innovative solutions, the company builds on a 150-year heritage of creating a stronger future for its customers. Based in Lancaster, Pennsylvania, Armstrong Flooring employs safe and responsible manufacturing practices in eight manufacturing facilities worldwide.
Armstrong Flooring announced today that it has reached an agreement with an affiliate of Overton Moore Properties to sell its South Gate, California production facility, warehouse, and real estate property for $76.7 million in cash.
- It is expected that Armstrong Flooring will receive about $65 million in cash after fees and expenses, along with $10.5 million to be held in an environmental escrow.
- A variety of closing conditions will need to be satisfied before the transaction can close. Closing is anticipated to occur during the first quarter of 2021.
- A portion of proceeds, about $20 million, will be used to settle some outstanding credit obligations of the company, as stipulated in its term facility.
- With the net proceeds of the deal, AFI expects its available liquidity to increase by approximately $75 million, as a result of the release of cash currently held in a cash reserve account, as well as the repayment of financial obligations.
- This money will be held in escrow until the escrow is exhausted, or until designated by the appropriate authority as being no longer required.
- A cash income tax burden of less than $1 million is expected as a result of the sale.
- Remaining cash or liquid assets will be available to continue investing to transform the Company into a leaner, faster-growing, and more profitable business.