Champion Industries agrees to sell Herald-Dispatch newspaper
CHARLESTON, W.Va. -- Champion Industries Inc. has reached a deal to sell the Huntington Herald-Dispatch newspaper for $10 million -- a fraction of what the company originally paid for it six years ago.
Champion, run by chairman and chief executive officer Marshall Reynolds, plans to sell the company to Reynolds' son, Delegate Doug Reynolds, D-Cabell, next month, according to a filing made June 21 with the U.S. Securities and Exchange Commission.
According to the filing, Champion entered into a letter of intent on June 18 to sell the Herald-Dispatch to the younger man.
Doug Reynolds will pay $10 million in cash and assume all current debts to vendors and suppliers as part of the transaction, which will close on or before July 15. The filing said Doug Reynolds has already place $2 million in escrow to cover the sale.
While the filing said Doug Reynolds may form an investment group to fund the acquisition, he "was fully prepared to close the transaction without investor participation."
The filing said Champion conducted a nationwide marketing process for the sale of the Herald-Dispatch, which resulted in one other current offer. After consulting with its independent financial advisers, the Champion board decided Doug Reynolds' offer was the best in terms of price and conditions.
Doug Reynolds could not immediately be reached for comment regarding the sale.
The $10 million purchase price is low compared to the $77 million Champion originally paid to buy the newspaper from GateHouse Media in 2007.
Champion, the parent company of Champion Printing and Capitol Business Interiors, financed much of that purchase with debt, which has strained the company's balance sheet in recent years.
Earlier this year, the company received a notice of default from Fifth Third Bank of Huntington, which, along with several other banks, has provided the company with a revolving credit facility and term loan.
While the company has made all of its required principal and interest payments to the banks, Champion failed to meet minimum earnings before interest, taxes, depreciation and amortization requirements spelled out in the debt covenants.
In response to the default notification, the company retained Timothy Boates of RAS Management Advisors LLC to serve as its chief restructuring officer.
In May, following Boates' hiring, the company negotiated a forbearance agreement with Fifth Third Bank to delay action on the debt default until after Sept. 30.
The delay was designed give the company more time to shore up its balance sheet and address its debt.
According to the company's most recent earnings report, it has already paid off nearly 61 percent of the debt generated by the Herald-Dispatch acquisition.
It currently has about $36.5 million in interest-bearing debt left on its balance sheet.
Contact writer Jared Hunt at firstname.lastname@example.org or 304-348-4836.