Champion Industries revolver, term loans terminate; no payments made

By Caroline Salls

Pittsburgh, Oct. 4 - Champion Industries, Inc.'s term loan facilities and revolving credit facility terminated on Sept. 30 as a result of the expiration of the company's forbearance period, according to an 8-K filed Friday with the Securities and Exchange Commission.

The revolver termination date and the final maturity of term loans A and term loans B also occurred on Sept. 30. Champion said it failed to pay the principal, interest and other amounts owed on that day.

The lender parties advised the company that, as a result of the loans' termination, they are no longer obligated to either forbear from accelerating the maturity of the loans, terminating the commitments, otherwise enforcing payment obligations or exercising any other rights and remedies available to them or to make any loans, extensions of credit or other financial accommodations under Champion's credit agreement.

As of Oct. 1, Champion does not have the right to request any revolving loans, request the issuance of any letter of credit or draw or otherwise request a temporary overadvance, absent the continuing consent of the administrative agent.

According to the 8-K, the lender parties have not decided what actions they will take in connection with the forbearance expiration and Champion's failure to repay the loans.

The lender parties did expressly reserve all rights available to them, including ceasing the daily cash sweep of any excess collected and available funds in deposit and operating accounts for application to the revolving loans and permitting Champion to use all collected and available funds in applicable accounts as long as it complies with covenants and other agreements and the revolving loan balance does not exceed $5.5 million as of the opening of business on Oct. 1.

The lender parties also expressly reserved the right to discontinue, without notice, any collected funds non-application or any usage of funds and warned that neither Champion nor its subsidiaries should expect the agent to continue any collected funds non-application or any usage of funds after Oct. 1.

Champion said it believes it has received guidance from the administrative agent that will allow it to operate on a cash basis from Oct. 1 until further advised by the agent.

In addition, the company said it believes it has reasonable opportunities to potentially exit its current credit facilities with the lender parties. Champion said it has had numerous discussions with the administrative agent and some of the lender parties and believes the parties are generally in favor of an exit.

Champion is a Huntington, W.Va.-based company that performs commercial printing, manufactures business forms and supplies office products and furniture.

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