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Champion to sell Herald-Dispatch for $10 Million

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Champion Industries of Huntington has reached an agreement to sell the city's daily newspaper to a son of the company's CEO for about 13 percent of what Champion paid for it six years ago.

And other assets of the company may be ready for sale, too.

According to a document filed with the Securities and Exchange Commission late last week, Champion entered into a letter of intent on June 18 "to sell substantially all of the assets of its operating division known as The Herald-Dispatch, composing the newspaper segment" to Douglas Reynolds. Doug Reynolds is the son of Champion CEO Marshall T. Reynolds. He is a member of the West Virginia House of Delegates., representing Cabell County.

"Mr. Douglas Reynolds was fully prepared to close the transaction without investor participation. Champion's investment advisor had conducted a nationwide marketing process for the sale of the Herald-Dispatch, which resulted in one other current offer. Champion's board of directors, in consultation with its independent advisors, determined that Mr. Douglas Reynolds' offer was the better offer both in terms of price and conditions," according to the SEC filing.

Reynolds will pay $10 million cash for The Herald-Dispatch. He has deposited $2 million in escrow. The sale is expected to close on or before July 15.

Champion acquired The Herald-Dispatch from GateHouse Media in 2007. The transaction was announced in June, or about two months after Gannett Co. Inc. had announced it had sold The Herald-Dispatch and three other newspapers to GateHouse for $410 million. GateHouse bought The Herald-Dispatch with the intent of selling it again, as Huntington did not fit with its strategy of having daily and nondaily newspapers in market clusters.

Champion paid GateHouse $77 million for The Herald-Dispatch. The sale price included River Cities Printing, a small printing company that was owned and operated by The Herald-Dispatch. River Cities Printing's operations were absorbed into those of Champion subsidiary Chapman Printing.

In May 2009, Champion announced an austerity move that included the elimination of about 12 percent of the jobs at The Herald-Dispatch.

According to Champion's most recent earnings report filed with the SEC, The Herald-Dispatch's revenues in the second quarter of its fiscal year, which ended April 30, and for the first half are down 10 percent or more from a year ago. Advertising revenues in the second quarter were about $2.3 million and circulation revenues were about $700,000. Both were down from the previous year, "reflective of macro industry dynamics coupled with the residual effect of the global economic crisis," the documents stated.

The document listed the assets of The Herald-Dispatch as being $10,180,705. Champion lists the circulation of The Herald-Dispatch as 23,000 daily and 28,000 on Sunday.

In its second-quarter filing with the SEC, Champion also said it has agreed in principle to a letter of interest regarding the printing division and is actively engaged in discussions regarding an asset purchase agreement for the printing division. It did not provide further details. Champion also received a letter of interest for its office furniture division, but it did not meet the requirements of a forbearance agreement signed after Champion had defaulted on a loan.