Moody's may drop Armstrong

Moody's Investors Service said it placed the ratings of Armstrong World Industries, Inc. under review for possible downgrade.

The review follows the recent announcement by Armstrong that it intends to pay shareholders a special cash dividend in the amount of about $800 million funded from a combination of cash on hand and debt, the agency noted.

In a related rating action, Moody's said it withdrew the ratings on the company's proposed bank credit facility since Armstrong is now considering various alternative combinations of senior secured credit and unsecured notes.

Affected ratings include the company's corporate family rating at Ba2; probability of default rating at Ba3; $300 million senior secured revolving credit facility due 10/02/2011 at Ba1 (LGD2, 23%); $250 million senior secured term loan A due 10/02/2011 at Ba1 (LGD2, 23%); and $190 million senior secured term loan B due 10/02/2013 at Ba1 (LGD2, 23%).

The company's speculative-grade liquidity rating remains SGL-1 for now, but will likely be lowered during or at the conclusion of the ratings review, Moody's said.

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