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Champion Industries Defaults on Debt

NEW YORK ( The Deal) -- Commercial printer Champion Industries Inc. has defaulted on its debt after failing to comply with a cash flow covenant and is now working with an investment bank and crisis manager to assess it restructuring options.

Huntington, W.Va.-based Champion received a notice of default from lenders led by administrative agent Fifth Third Bank on Monday.

Champion Industries is working with investment banking firm Raymond James & Associates Inc. "to assist it with a restructuring or refinancing of the existing debt and other potential transaction alternatives," it said in filings with the Securities and Exchange Commission.

The company is also working with its chief restructuring adviser at RAS Management Advisors LLC, SEC filings said.

Champion Industries, which manufactures business forms, office products and office furniture in regional markets in the U.S., is in talks with its lenders regarding the default and the restructuring or refinancing of its debt.

The company has a revolving credit facility and a term loan with a syndicate of banks led by Fifth Third Bank. The other lenders include Huntington National Bank, Suntrust Bank, Old National Bank NA, United Bank Inc. and Summit Community Bank, SEC filings said.

Champion amended its credit agreement in October and now has a more than $19 million term loan A priced at Libor plus 800 basis points; a more than $6.27 million term loan B priced at 16%; and a $8.43 million revolver priced at Libor plus 600 basis points. The debt all matures on June 30.

According to SEC filings, the company's debt contains "restrictive financial covenants requiring the company to maintain certain financial ratios." On Monday, the company was advised that it had failed to comply with the minimum Ebitda covenant under its debt.

The company is required to have $3.35 million in minimum Ebitda as of Feb. 28 and $4.1 million in minimum Ebitda as of March 31, SEC filing said.

While Champion Industries, which also publishes the Herald-Dispatch, a daily newspaper in Huntington, has defaulted on its debt, it hasn't missed a principal or interest payment on it. Since 2007, the company has paid its debt down by $49.7 million "during a significant economic and secular downturn within the economy," SEC filings said.

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