Because of the default, Champion Industries could be facing an accelerated maturity of some $36 million in remaining outstanding debt.
The company warned that it could default on its debt by the end of March "due to the short-term nature of the credit expiration and the multitude of covenants we are required to comply with," Champion said in a March 15 statement.
"We intend to work with our secured creditors and advisers to address our debt maturities and liquidity to the best of our ability and if successful in stabilizing our funding platform going forward, we believe our core business has the opportunity to improve," Champion Industries chairman and CEO Marshall T. Reynolds said in the March 15 statement.
Champion Industries also warned that it will likely miss its $2.1 million payment due on its bullet loan A due on March 31. The bullet loan A is priced at Libor plus 800 basis points. Champion Industries had a $3.54 million net loss for the first quarter of 2013 and a $22.9 million net loss for the entire year in 2012.
The company incurred its original $85 million in debt during its acquisition of the Herald-Dispatch, which has a daily and Sunday circulation of 24,000 and 30,000, respectively. But Champion Industries has been acquisitive in other industries, too, having acquired 15 printing companies, eight office products and office furniture companies, one company with a combined emphasis on both printing and office products and office furniture and a paper distribution division (which was subsequently sold in 2001) since its initial public offering on Jan. 28, 1993.
Champion Industries listed its assets at $43.8 million and its liabilities at $48.73 million as of Jan. 31 in SEC documents.
The company's chief financial officer, Todd R. Fry, couldn't be reached for comment. A spokesman for Fifth Third Bank refused to comment.
Champion Industries' counsel, Thomas J. Murray at Huddleston Bolen LLP, refused to comment.
Written by Jamie Mason in New York