- Current report filing (8-K)
April 06 2010 - 5:06PM
Edgar (US Regulatory)
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC
20549
FORM 8-K
CURRENT REPORT
PURSUANT
TO SECTION 13 OR 15(D) OF
THE
SECURITIES EXCHANGE ACT OF
1934
Date of
Report (Date of earliest event reported)
April 6,
2010
Champion
Industries, Inc.
(Exact
Name of Registrant as Specified in Its Charter)
West
Virginia
(State or
Other Jurisdiction of Incorporation)
0-21084
55-0717455
(Commission
File
No.) (IRS
Employer Identification No.)
2450
First Avenue
P. O. Box
2968
Huntington,
West
Virginia
25728
(Address
of Principal Executive
Offices)
(Zip Code)
(304)
528-2700
(Registrant's
Telephone Number, Including Area Code)
Not
Applicable
(Former
Name or Former Address, if Changed Since Last Report)
Check the
appropriate box below if the Form 8-K filing is intended to simultaneously
satisfy the filing obligation of the registrant under any of the following
provisions
(see
General
Instruction A.2. below):
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0
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Written
communications pursuant to Rule 425 under the Securities Act (17 CFR
230.425)
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0
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Soliciting
material pursuant to Rule 14a-12 under the Exchange Act (17 CFR
240.14a-12)
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0
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Pre-commencement
communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR
240.14d-2(b))
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0
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Pre-commencement
communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR
240.13e-4(c))
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INFORMATION
TO BE INCLUDED IN THE REPORT
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Section
1 – Registrant’s Business and
Operations
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Item 1.01 Entry Into a Material Definitive
Agreement.
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Champion Industries, Inc. ("Champion")
announced on April 6, 2010 that Champion, Fifth Third Bank, as a
Lender, L/C Issuer and Administrative Agent for Lenders (the
"Administrative Agent") and the other Lenders party to Champion's Credit
Agreement dated September 14, 2007 (the "Credit Agreement") had entered
into a Second Amendment to Credit Agreement and Waiver dated March 31,
2010 (the "Second Amendment"). All conditions precedent to the
effectiveness of the Second Amendment were satisfied on April 6,
2010.
In the Second Amendment, the
Administrative Agent and Lenders waived any default or event of default
arising from Champion's previously disclosed violations of provisions of
the Credit Agreement. The Second Amendment amended various provisions of
the Credit Agreement, including but not limited to:
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a $17,000,000 revolving credit facility with a sublimit of up
to $3,000,000 for letters of credit and $3,000,000 for swing line loans.
Outstanding borrowings thereunder may not exceed the sum of (1) up to
85% of eligible receivables plus (b) up to the lesser of $6,000,000 or
50% of eligible inventory.
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at Champions option, interest at a LIBOR Rate, so long as no default
exists.
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post-default increase in interest rate of 2%.
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amendment of various financial covenants.
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fixed charge coverage ratio is required to be 1.0:1.0 through
January 31, 2011; 1.1:1.0 through January 31, 2012 and 1.20:1.00
thereafter.
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leverage ratio shall not be greater than 6.5:1.00 at April 30, 2010
with 0.5:1.00 stepdowns quarterly through April 30, 2011 and 0.25:1.00
quarterly stepdowns through April 30, 2012.
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minimum EBITDA pursuant to a quarterly build up commencing with the
three months ended April 30, 2010 of $2,700,000, the six months ended
July 31, 2010 of $5,400,000, the nine months ended October 31,
2010 of $8,900,000 and the twelve months ended January 31,
2011 of $11,800,000, thereafter varying quarterly stepups culminating in
twelve months trailing EBITDA of $14,300,000 at October 31, 2012.
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maximum capital expenditures are limited to $2,000,000 per fiscal
year for the years ended October 31, 2010 and 2011 and $2,500,000
thereafter.
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enhanced reporting by Champion to Administrative Agent, including
monthly reports and conference calls, quarterly reports by Champions
independent auditors of restructuring charges and organizational expense
reductions.
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application of Champion's income tax refunds applied to reduce
indebtedness under the Credit Agreement.
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As
required by the Second Amendment, Champion, Marshall T. Reynolds and the
Administrative Agent entered into a Contribution Agreement and Cash
Collateral Security Agreement dated March 31, 2010 (the "Contribution
Agreement") pursuant to which Mr. Reynolds deposited $2,500,000 as
cash collateral with the Administrative Agent, which the Administrative
Agent may withdraw in the event of (i) an event of default under the
Credit Agreement, (ii) failure by Champion to maintain a fixed charge
coverage ratio, as defined in the Second Amendment, greater than or equal
to 1.0 to 1.0 as of the last day of each fiscal quarter or (iii) failure
of Champion to deliver quarterly compliance certificates under the Credit
Agreement.
Mr.
Reynolds has granted the Administrative Agent a first priority security
interest in the cash collateral.
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Amounts drawn down by the Administrative
Agent will be applied to repayment of Champion's obligations under the
Credit Agreement. The Contribution Agreement expires upon the earliest of
(i) full drawdown of the $2,500,000 deposited, (ii) repayment in full of
all obligations under the Credit Agreement and termination of all
commitments thereunder and (iii) the Administrative Agent's determination
that Champion has achieved a fixed charge coverage ratio of at least 1.2
to 1.0 as of the last day of two consecutive fiscal quarters of
Champion.
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In connection with the Contribution
Agreement, Champion has executed and delivered to Mr. Reynolds a
Subordinated Promissory Note in amount of $2,500,000, payment of principal
and interest on which is prohibited prior to January 31, 2011, and
thereafter only with the Administrative Agent's consent. The Subordinated
Promissory Note bears interest at the Wall Street Journal prime rate
(currently 3.25%), matures September 14, 2014 and is unsecured.
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Upon closing of the Second
Ammendment, Champion paid to the Administrative Agent (i) an arrangement
fee of $100,000 and (ii) an upfront fee of $250,000, for the benefit of
the Lenders.
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The foregoing summary of certain
provisions of the Second Amendment, the Contribution Agreement and the
Subordinated Promissory Note is qualified in its entirety by reference to
the complete Second Amendment filed as Exhibit 10.1 hereto, the
Contribution Agreement filed as Exhibit 10.2 hereto and the Subordinated
Promissory Note filed as Exhibit 10.3 hereto, all of which are
incorporated herein by reference.
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Section 2 – Financial
Information
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Item
2.03
Creation of a Direct
Financial Obligation or an Obligation Under an Off-Balance Sheet
Arrangement of a Registrant.
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The
description under “Item 1.01 – Entry into a Material Definitive Agreement”
of this Current Report on Form 8-K is incorporated herein by
reference.
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Section
9 – Financial Statements and Exhibits
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Item
9.01 Financial Statements and
Exhibits
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(d)
Exhibits
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10.1
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Second Amendment and Waiver to Credit Agreement dated March 31,
2010 among Champion Industries, Inc. and Fifth Third Bank, as Lender, L/C
Issuer and Administrative Agent for Lenders.
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10.2
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Contribution Agreement and Cash Collateral Security Agreement
dated March 31, 2010 among Marshall Reynolds, Champion
Industries, Inc. and Fifth Third Bank, as Administrative Agent for
Lenders.
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10.3
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Subordinated Promissory Note dated March 31, 2010 from Champion
Industries, Inc. to Marshall Reynolds.
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99.1
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Press Release dated April 6, 2010
captioned "CHAMPION AMMENDS CREDIT AGREEMENT".
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SIGNATURE
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Pursuant
to the requirements of the Securities Exchange Act of 1934, the registrant
has duly caused this report to be signed on its behalf by the undersigned
hereunto duly authorized.
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CHAMPION
INDUSTRIES, INC.
(Registrant)
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Date: April
6, 2010
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/s/
Todd R. Fry
Todd
R. Fry, Senior Vice President
and
Chief Financial Officer
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EXHIBIT
INDEX
10.1
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Second Amendment and Waiver to Credit Agreement dated March 31, 2010
among Champion Industries, Inc. and Fifth Third Bank, as Lender, L/C
Issuer and Administrative Agent for Lenders.
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10.2
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Contribution Agreement and Cash Collateral Security Agreement
dated March 31, 2010 among Marshall Reynolds, Champion
Industries, Inc. and Fifth Third Bank, as Administrative Agent for
Lenders.
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10.3
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Subordinated Promissory Note dated March 31, 2010 from Champion
Industries, Inc. to Marshall Reynolds.
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99.1
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Press Release dated April
6, 2010 captioned "CHAMPION AMMENDS CREDIT
AGREEMENT".
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