Clean Sweep For A Floor Covering

Nobody paid much attention when American Biltrite sold its Amtico division in February to Congoleum, a privately held producer of vinyl-sheet flooring material. Those who did--and bought shares of Biltrite --made a bundle. At the time of the deal, Biltrite, which is listed on the American Stock Exchange, was at 24. It's now at 41 and rising.

What's the scoop? And why was the deal a big winner for all? The Amtico unit, which makes floor tiles, including the do-it-yourself variety, boosted Congoleum's floor-covering business. Biltrite is benefiting, too, because the Amtico-Congoleum deal gave it a 40% stake in Congoleum. So when Congoleum posts profits, so does Biltrite.

One investor notes that Biltrite's third-quarter results gave a clue to the magnitude of its earnings potential from Congoleum. Of Biltrite's $1.26-a-share earnings in the September quarter, 96 came from its Congoleum interest. The other 30 came from Bilt-rite's other business--industrial tapes.

For all of fiscal 1994, the Congoleum stake should chip in $5 a share, figures one analyst. As a result, he says, Biltrite will earn $6.50 a share in 1994 vs. 1993's estimated $3.25, which included two quarters with the Congoleum interest.

One fund manager who has been buying into Biltrite figures the stock could more than double should Biltrite sell its 40% stake--possibly back to Congoleum. One reason Congoleum might want it back: Congoleum may want to go public. The fund manager thinks the fact that the company is now trying to refinance debt seems like a step in that direction.