Moody's cuts Armstrong World

Moody's Investors Service said it downgraded Armstrong World Industries, Inc.'s corporate family rating to B1 from Ba2 and probability of default rating to B1 from Ba3.

Moody's also said assigned a B1 rating to the company's proposed $1.05 billion senior secured bank credit facility. Armstrong's speculative grade liquidity is lowered to SGL-2 from SGL-1.

The ratings on the company's existing senior secured bank credit facilities, including its $250 million senior secured revolving credit facility's B1 rating (LGD 3, 42%) rating, $250 million senior secured term loan A's B1 rating (LGD 3, 42%) and $550 million senior secured term loan B's B1 rating (LGD 3, 42%), will be withdrawn once repaid.

These actions result from Armstrong's intent 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 outlook is stable.

The downgrade reflects diminished credit metrics as a result of the aggressive financial strategy exhibited by Armor TPG Holdings LLC, one of its largest shareholders, Moody's said.

The increase in debt will result in deterioration of key credit metrics, higher debt service requirements and diminished liquidity, the agency said.

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