CHARLESTON, W.Va. -- Champion Industries Inc., the corporate parent of Champion Printing, Capitol Business Interiors and The Herald-Dispatch newspaper in Huntington, said its ability to operate as a going concern depends on its ability to address its current credit situation.
The company lost $23.5 million in the financial year ended Oct. 31, compared to a loss of $4.2 million in the prior year.
Champion bought The Herald-Dispatch in 2007 for $77 million, financing much of the purchase with debt. The deal was revealed in late June 2007, when Champion's stock was trading at $7.20 a share. A year ago Champion's stock was trading at 82 cents a share. On Monday it traded at 13 cents a share.
Marshall Reynolds, Champion's chairman and chief executive officer, said in a prepared statement, "...in spite of the numerous hurdles, challenges and actions we have taken in 2012, in the final analysis we were able to essentially hold our core business stable."
Champion said its 2012 and 2011 results "are reflective of a continuation of the most difficult operating environment the company has ever faced, primarily within the printing segment and secondarily in the newspaper segment. Even in this extremely difficult operating environment, the company was able to essentially hold sales and gross profit stable."
The company noted that its debt has been reduced by $47.7 million since it bought The Herald-Dispatch, but it still has $39.8 million of interest-bearing debt and is subject to some restrictive financial covenants.
Champion said it was in compliance with the covenants as of Oct. 31 but because of the short-term nature of the credit and the multitude of covenants, "there is a reasonable possibility of default at or before March 31, 2013 and our ability to operate as a going concern is dependent on our ability to address our current credit situation."
Reynolds said, "We will continue to focus on our core businesses and identify opportunities to improve our performance and efficiencies. We must focus on improving our core business which should be a key component of a fundamental solution to our pending credit maturities."
According to a proxy statement filed in October, Reynolds is Champion's principal shareholder.
Contact writer George Hohmann at busin...@dailymail.com or 304-348-4836.