TPG Capital in Investment in Armstrong World Industries

Cleary Gottlieb is representing TPG Capital in connection with its proposed investment in Armstrong World Industries, Inc., announced on August 11.

Armstrong emerged from Chapter 11 bankruptcy proceedings three years ago as an NYSE-listed company relieved of substantially all of its responsibility for existing or future claims based on its prior manufacture or sale of products containing asbestos. All such potential liabilities were assumed by a newly-formed Trust. In return, the Trust received cash plus approximately 64% of the outstanding Armstrong stock to be used to pay claims over time.

The Trust has now agreed to sell TPG 7 million shares, leaving the Trust with majority ownership, and to also sell TPG a prepaid cash-settled forward with respect to another 1,039,777 shares at the same price per share, which is the volume-weighted average trading price for the 20 trading days ended August 7. TPG and the Trust will also enter into a Shareholders’ Agreement pursuant to which David Bonderman and another TPG representative and two Trust designees will go on the Armstrong Board, and the Trust and TPG will agree on the selection of the Company’s six independent directors. The transaction is scheduled to close in late August.

Under provisions of Armstrong’s Articles of Incorporation relating to significant transfers of stock by the Trust, TPG will be required to make a tender offer, at the same per share price, for approximately 4.4 million shares owned by other shareholders, or about another 8% of the outstanding stock.