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Champion Industries defaults on loan

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Champion Industries, a Huntington-based company involved in the printing, office furniture and newspaper industries, filed a notice with the Securities and Exchange Commission on March 25 that it was in default of a $10 million loan.

The loan is part of a financing package that originated in September 2007 when Champion bought The Herald-Dispatch of Huntington from the GateHouse newspaper group. Champion has had to renegotiate the loan package several times since then.

According the SEC filing, on March 25 Champion received a letter dated March 22 from Fifth Third Bank, the administrative agent under the credit agreement, saying it was in default of provisions in the agreement to maintain certain financial ratios.

In its filing, Champion says it has made every scheduled payment of principal and interest on the loan package, although it expects that it will not be able to make a payment on March 31. The filing says Champion has paid down about $49.7 million of the original $85.5 million loan "during a significant economic and secular downturn within the economy."

Champion said it is working with Raymond James & Associates on a restructuring or refinancing of the existing debt and other potential transaction alternatives.

"A total of approximately $36.0 million of debt, deferred fees and outstanding revolving line of credit borrowings are subject to accelerated maturity and, as such, the Lenders may, at their option, give notice to the Company that amounts owed are immediately due and payable," the SEC filing said.

On March 15, Champion released its quarterly earnings report. The company reported a net loss from continuing operations of $3.3 million in the first quarter of its fiscal year, which ended Jan. 31. That compares to a net loss from continuing operations of $83,000 in the same quarter a year ago.

Champion reported a net loss from discontinued operations of $291,000 in the quarter versus a loss of $3,000 a year ago.

"The results for 2013 over 2012 reflected a substantial decrease in earnings, primarily as a result of pre-tax non-cash impairment charges associated with goodwill of $(2.2) million associated with the printing segment as well as higher interest costs primarily associated with the amortization of debt discount associated with warrants issued to the Company's secured lenders," the company's earnings release said.

At the end of the quarter, the company's assets totaled $43.8 million and its liabilities totaled $48.7 million, leaving a shareholder deficit of $4.9 million.