Moody's: Armstrong view stable

Moody's Investors Service said it lowered Armstrong World Industries, Inc.'s speculative grade liquidity rating to SGL-3 from SGL-2 and changed the outlook to stable from positive. The agency also affirmed the corporate family rating at B1, the probability of default rating at B1-PD and the senior secured revolving credit facility due 2018, senior secured term loan A due 2018 and senior secured term loan B due 2020 at B1 (LGD3, 42%).

The agency said it lowered the speculative grade liquidity rating due to the negative impact of ongoing shareholder-friendly activities on the company's liquidity profile. Armstrong recently announced that it will repurchase about $260 million of common stock from Armor TPG Holdings LLC and the Asbestos Personal Injury Settlement Trust, which together own a controlling interest in the company.

The repurchases will reduce the company's pro forma domestic cash on hand as of June 30 to about $2.3 million from $222 million, and revolver and accounts receivable securitization facility availability will be reduced by about $40 million, resulting in pro forma combined availability of about $213 million, Moody's said.

The change in outlook reflects Moody's view that the controlling shareholders are negatively impacting Armstrong's liquidity profile to enrich themselves. The agency said the $260 million being used for share repurchases represents about 17 years of Armstrong's reported GAAP free cash flows for the last 12 months ended in June.

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