Sunday, July 14, 2024
Hawai'i Free Press

Current Articles | Archives

Tuesday, November 11, 2014
Horizon Sells Hawaii Operations to Pasha Lines, Alaska to Matson
By News Release @ 7:14 PM :: 5312 Views :: Jones Act

Horizon Lines To Be Acquired By Matson For $0.72 Per Share In Cash

-- Matson to acquire all outstanding shares of Horizon Lines immediately after Pasha acquires Horizon's Hawaii trade lane business

-- Horizon Lines' net debt, which will be reduced with proceeds of approximately $141.5mm from the Pasha transaction, will be repaid by Matson at closing

-- Acquisition represents an 89% premium to Horizon Lines' stock price

News Release from Horizon Lines

CHARLOTTE, N.C., Nov. 11, 2014 -- Horizon Lines, Inc. (HRZL) ("Horizon") today announced it has entered into definitive agreements with each of Matson Inc. (MATX) ("Matson") and The Pasha Group ("Pasha"). Under the Matson agreement, Matson will acquire all outstanding shares of Horizon Lines for $0.72 per share in an all-cash transaction. The acquisition price represents a premium of approximately 89% over Horizon's closing stock price on November 10, 2014.  The Matson agreement has been unanimously approved by Horizon's Board of Directors and Horizon shareholders representing 55% of the fully diluted equity, which also represents 41% of the outstanding voting common stock on November 11, 2014, have agreed to vote their shares in support of the transaction.

Under the Pasha agreement, Pasha will acquire Horizon Lines' Hawaii trade lane business, prior to closing of the Matson agreement, for approximately $141.5 million in cash. The proceeds from the Pasha transaction will reduce Horizon Lines' debt obligations prior to closing of the Matson transaction, at which time Matson will acquire all of the outstanding shares of Horizon Lines and repay the remaining debt outstanding at closing. The Pasha agreement has been unanimously approved by Horizon's Board of Directors.

As a result of the transactions, Matson, Inc. will acquire all of Horizon Lines' business operations, except for the Hawaii trade lane business. The two transactions taken together are valued at approximately $598 million on an enterprise value basis. Matson will fund its transaction from available borrowings under its bank credit facilities and existing cash on hand. Pasha will fund its transaction from a committed debt financing agreement.  There are no financing conditions to either transaction.

David N. Weinstein, Chairman of the Board of Directors of Horizon Lines, Inc., said, "These transactions will place our company in the hands of strong stewards with reputations for outstanding customer service.  Matson has over 130 years of shipping experience and is guided by a rich history of integrity and innovation.  Pasha is a third generation, family-owned business with a proud heritage of excellence and deep ties to the Hawaiian community.  Both Matson and Pasha are well-positioned to serve our valued customers."

Steve Rubin, President and Chief Executive Officer of Horizon Lines, Inc., said, "Our Board and management team have been working diligently to improve Horizon Lines' financial and operational performance while continuing to provide superior service across all our trade lanes.  These transactions are a direct reflection of those efforts, and will enable the proud heritage of Horizon Lines to be passed on to Matson and Pasha."

Timing, Conditions and Approvals

Horizon Lines, Inc. expects to complete the transactions in 2015, based upon the timing of required approvals and other closing conditions.

The transactions are subject to regulatory approvals, including any required notifications pursuant to the Hart-Scott-Rodino Antitrust Improvements Act of 1976, and other customary closing conditions.  The transaction with Matson, Inc. is conditioned upon the closing of the Pasha transaction.  Additionally the Pasha transaction is conditioned upon the Matson transaction being ready to close immediately thereafter.

  *   *   *   *   *

Horizon Lines Terminating Puerto Rico Operations

News Release from Horizon Lines

CHARLOTTE, N.C., Nov. 11, 2014 -- Horizon Lines, Inc. (HRZL) ("Horizon Lines" or the "Company") today announced that it would cease providing liner service between the U.S. and Puerto Rico by the end of 2014 due to continuing losses without the prospect of future profitability.

Sea-Land Service, Inc. ("Sea-Land") pioneered the marine container shipping industry and established Horizon Lines' business on April 26, 1956, when the vessel Ideal-X sailed from Newark, New Jersey to Houston, Texas.  Sea-Land introduced container shipping to the Puerto Rico market in 1958, which Horizon Lines has continued to the present.

"We have a 56-year history in the Puerto Rico trade and truly value the relationships we have established," said Steve Rubin, President and Chief Executive Officer of Horizon Lines.  "Unfortunately, a combination of factors, including uncertain prospects for the Puerto Rican economy, losses over recent years and more expected going forward, aging ships that we cannot afford to continue to maintain or replace, and upcoming large capacity additions by two other carriers has led to this difficult but prudent and necessary decision."

In Puerto Rico, Horizon Lines has incurred substantial cumulative losses and negative cash flows in recent years, despite ongoing efforts to remain competitive.  Horizon is currently serving the trade with two vessels built in the early 1970s that have become increasingly costly to operate and expensive to maintain.  As recently as 2012, Horizon operated four vessels, but the Company had been forced to remove two vessels from the Puerto Rico service due to prolonged falling demand and the need to cut costs.

As an example of the challenges this aging fleet has posed, last month the Company chose to cease operating its Horizon Discovery in the Houston to San Juan trade route and has entered into an agreement to scrap this vessel. The Horizon Discovery built in 1968, would have required substantial expense to dry-dock  for maintenance as required by federal law. The two vessels Horizon Lines presently operates in the trade are both required to be dry-docked similarly during 2015 at an estimated combined cost of $16-20 million.  Furthermore, other carriers are scheduled to introduce four new, efficient vessels into service that will greatly expand capacity, further burdening Horizon Lines' current, limited ability to offer ongoing service that can remain competitive.

Operations of the Puerto Rico service will be curtailed in a careful and orderly manner.  The Company will cease liner service for domestic customers by the end of the year, however San Juan terminal services will continue to be provided into the first quarter of 2015.  The Company will work closely with customers to assist them in identifying service alternatives.

The Company is expected to incur restructuring charges between $90 million to $100 million related to terminating its Puerto Rico operations. These charges include the cost of employee severance and termination benefits of $35 million to $45 million and costs of $55 million primarily related to equipment impairment and contract termination costs. Approximately $85 million to $95 million of the charges are expected to result in cash payments. These costs are preliminary estimates and are subject to change.

"On behalf of our entire Board and management team, I want to express our deep appreciation to our employees, customers, vendors, union partners, and the citizens of Puerto Rico for their efforts and support over the years," said Mr. Rubin.   "During my short tenure as CEO we have made tough decisions to try to restore profitability in the hopes of continuing the service.  In addition, management had explored several other strategic options in an attempt to maintain a presence in Puerto Rico, however none proved to be possible.  This decision is a very painful and difficult one for all of us, but it is the only viable course of action for our Company given the circumstances."

Horizon Lines, Inc. also announced today that it has entered into definitive agreements for a series of transactions that will result in the sale of the entire company, the first being the sale of its Hawaii business to The Pasha Group ("Pasha"), followed by Horizon Lines, Inc.'s subsequent acquisition by Matson, Inc. ("Matson") (MATX).

Horizon Lines' decision to terminate its Puerto Rico service is independent of those transactions, and the Company intends to cease operations between the U.S. and Puerto Rico whether or not the transactions with Pasha and Matson are consummated.

  *   *   *   *   *

The Pasha Group Announces Agreement to Acquire Horizon’s Hawaii Business

News Release from Pasha Group, November 11, 2014

The Pasha Group, a family-owned global logistics and transportation company, today announced an agreement to acquire the Hawaii trade-lane business of Horizon Lines, Inc., a Jones Act container shipping and integrated logistics company, for approximately $141.5 million. The transaction will greatly expand and complement Pasha’s current offerings for shipping between the mainland United States and Hawaii.

Under the terms of the agreement, Pasha will acquire certain subsidiaries of Horizon constituting substantially all of Horizon’s Hawaii trade-lane business, including four Jones Act container ships. Immediately following Pasha’s acquisition of Horizon’s Hawaii trade-lane business, Horizon will be acquired by Matson pursuant to a merger. The transaction is expected to close in 2015, subject to regulatory approval, satisfaction of the closing conditions to the merger of Horizon and Matson and other customary closing conditions.

In becoming part of Pasha, Horizon’s Hawaii business will operate alongside Pasha’s existing operations. With these additional vessels, Pasha will provide customers with a wider offering of high-quality, scheduled shipping and logistics services for containers, refrigerated containers, and a variety of roll-on/roll-off cargoes.

"Since Pasha entered the Hawaii transportation circuit nearly 10 years ago, we have elevated the quality of customer service," said George Pasha, IV, President and CEO. "With this acquisition, we will supplement that service and provide an improved, more competitive offering on the Hawaii trade lane."

"First and foremost, Pasha is a full-service transportation company," Pasha added, "and as such our primary goal is to enrich the transportation services available to our customers. A decade ago, we introduced the first pure car/truck carrier for the Hawaii-Mainland trade lane, the Jean Anne, in response to customers’ needs. We now look forward to providing Pasha-quality service for even more of the people of Hawaii."

Pasha noted that environmental responsibility and stewardship will continue to be a major part of Pasha’s culture and vessel operations with the addition and improvements to Horizon’s ships. The company will also stay actively involved with local charities and organizations in the communities it serves. "We are excited to welcome Horizon into our ‘ohana," Pasha said.

AMA Capital Partners LLC is serving as financial advisor to The Pasha Group, Inc. and Cadwalader, Wickersham & Taft LLP and Nixon Peabody LLP are serving as legal advisors.

For photos, go to:

For video clips, go to:

  *   *   *   *   *

Matson To Acquire Horizon's Alaska Operations

Transaction value of $0.72 Per Common Share Plus Repayment of Debt

Acquisition Accretive to Matson's Earnings and Cash Flow

Separately Horizon to Sell Hawaii Operations to Pasha and Terminate Puerto Rico Operations

Matson Investor Conference Call Today at 5:00 PM Eastern Time

News Release from Matson, Inc

HONOLULU, Nov. 11, 2014 -- Matson, Inc. (NYSE: MATX) and Horizon Lines, Inc. (OTCQB: HRZL) today announced that they have entered into a definitive merger agreement pursuant to which Matson will acquire the stock of Horizon, which will include its Alaska operations and the assumption of all non-Hawaii business liabilities (the "Transaction").  Separately, Horizon today also announced that it has agreed to sell its Hawaii operations to The Pasha Group for $141.5 million (the "Hawaii Business Sale") and intends to shut down its Puerto Rico liner operations by the end of 2014.

Under the terms of the Transaction, Matson will acquire Horizon for $0.72 per fully diluted common share, or $69.2 million, plus the repayment of debt outstanding at closing. The total value for the Transaction is $456.1 million (before transaction costs), based on Horizon's net debt outstanding as of September 21, 2014, less the anticipated proceeds from the Hawaii Business Sale.

"The acquisition of Horizon's Alaska operations is a rare opportunity to substantially grow our Jones Act business," said Matt Cox, President and Chief Executive Officer of Matson. "Horizon's Alaska business represents a natural geographic extension of our platform as a leader serving our customers in the Pacific. We expect this transaction to deliver immediate shareholder value through earnings and cash flow accretion via significant cost and operating synergies. We are also encouraged by the long-term prospects of the Alaska market, which mirrors Hawaii in many operational ways, despite different underlying economic drivers. Both markets depend on reliable, superior and timely container cargo service as part of vital supply lifelines - hallmarks of the Matson brand."

Steve Rubin, President and Chief Executive Officer of Horizon, commented, "This transaction provides value for our shareholders while upholding our financial commitments. We wish the Matson team continued success in their new Alaska trade and we look forward to working with them to close this transaction and provide a seamless transition for our customers."

The Boards of Directors of both companies have unanimously approved the Transaction, and Horizon shareholders representing 55 percent of the fully diluted equity, which also represents 41 percent of the outstanding voting common stock on November 11, 2014, have agreed to vote their shares in support of the Transaction.

Matson will fund the Transaction from cash on hand and available borrowings under its revolving credit facility.  The Transaction is expected to close in 2015 after the completion of Horizon's sale of its Hawaii Business, Horizon's shareholder approval, and other customary closing conditions.

In a separate announcement today, Horizon announced that it will cease operations and shut down its Puerto Rico domestic liner service.  Horizon's decision to terminate its Puerto Rico service is independent of the Transaction, and Horizon intends to cease operations between the U.S. and Puerto Rico whether or not the Transaction is consummated.

Overview of Horizon's Alaska Operations Horizon has a long operating history in Alaska, pioneering container shipping into the market in 1964 under the Sea-Land banner.  Horizon deploys three diesel powered Jones Act qualified containerships and operates port terminals in Anchorage, Kodiak and Dutch Harbor.  Horizon's Alaska service consists of two weekly sailings from Tacoma to Anchorage and Kodiak, and a weekly sailing to Dutch Harbor.  In addition to the three vessels deployed, Horizon has a reserve steam powered Jones Act containership for dry-dock relief.

Matson Financial Impact Highlights Excluding the one-time items noted below, Matson expects the Transaction to be immediately accretive to earnings per share ("EPS"), providing low to mid-teens percent annual EPS accretion in years one and two post-closing, and approximately $0.35 to $0.45 annual EPS accretion thereafter.  In addition, within two years post-closing, Matson expects the Transaction to contribute approximately $70 million to consolidated EBITDA and to be approximately $1.00 accretive to annual cash flow per share.

Matson expects one-time pre-tax transaction closing costs to be approximately $25 million and one-time pre-tax restructuring and integration costs of approximately $20 to $25 million.


BofA Merrill Lynch and RBC Capital Markets are serving as financial advisors to Matson and Gibson, Dunn & Crutcher LLP is serving as legal advisor. Goldman, Sachs & Co. is serving as financial advisor to Horizon Lines and Kirkland & Ellis LLP is serving as legal advisor.

Conference Call and Webcast of Investors and Analysts:

In connection with this press release, Matson will hold a conference call today, November 11, 2014, at 5:00 PM Eastern Time. Investors and research analysts may call 1-877-312-5524 or 1-253-237-1144 and request the Matson call or conference number 34163842. The conference call will also be broadcast live over the Internet and will include a slide presentation that can be accessed on Matson's website at; Investor Relations.  A replay of the conference call will be available approximately two hours after the call through November 18, 2014 by dialing 1-855-859-2056 or 1-404-537-3406 and using the conference number 34163842.  The slides and audio webcast of the conference call will be archived on the Investor Relations page of Matson's website.

About Matson

Founded in 1882, Matson is a leading U.S. carrier in the Pacific. Matson provides a vital lifeline to the island economies of Hawaii, Guam, Micronesia and select South Pacific islands, and operates a premium, expedited service from China to Southern California. Matson's fleet of 21 owned and chartered vessels includes containerships, combination container and roll-on/roll-off ships and custom-designed barges. Matson Logistics, established in 1987, extends the geographic reach of Matson's transportation network throughout the continental U.S. Its integrated, asset-light logistics services include rail intermodal, highway brokerage and warehousing. Additional information about Matson, Inc. is available at

About Horizon

Horizon Lines, Inc. is one of the nation's leading domestic ocean shipping companies and the only ocean cargo carrier serving all three noncontiguous domestic markets of Alaska, Hawaii and Puerto Rico from the continental United States.  The company owns a fleet of 13 fully Jones Act qualified vessels and operates five port terminals in Alaska, Hawaii and Puerto Rico.  A trusted partner for many of the nation's leading retailers, manufacturers and U.S. government agencies, Horizon Lines provides reliable transportation services that leverage its unique combination of ocean transportation and inland distribution capabilities to deliver goods that are vital to the prosperity of the markets it serves. The company is based in Charlotte, NC, and its stock trades on the over-the-counter market under the symbol HRZL.

Additional Information and Where to Find It

This communication is being made in respect of the proposed transaction involving Matson and Horizon. Horizon intends to file with the Securities and Exchange Commission ("SEC") a proxy statement in connection with the proposed transaction with Matson. Horizon also intends to file with the SEC other documents regarding the proposed transaction. The definitive proxy statement will be sent or given to the stockholders of Horizon and will contain important information about the proposed transaction and related matters. SECURITY HOLDERS OF HORIZON ARE URGED TO READ THE PROXY STATEMENT REGARDING THE PROPOSED TRANSACTION AND ANY OTHER RELEVANT DOCUMENTS CAREFULLY AND IN THEIR ENTIRETY WHEN THEY BECOME AVAILABLE BECAUSE THEY WILL CONTAIN IMPORTANT INFORMATION ABOUT THE PROPOSED TRANSACTION.  Investors and security holders will be able to obtain copies of the proxy statement (when available) and other documents filed by Matson and Horizon, without charge, through the website maintained by the SEC at Copies of documents filed with the SEC by Matson will be made available free of charge on Matson's website at Copies of documents filed with the SEC by Horizon will be made available free of charge on Horizon's website at


TEXT "follow HawaiiFreePress" to 40404

Register to Vote


Aloha Pregnancy Care Center


Antonio Gramsci Reading List

A Place for Women in Waipio

Ballotpedia Hawaii

Broken Trust

Build More Hawaiian Homes Working Group

Christian Homeschoolers of Hawaii

Cliff Slater's Second Opinion

DVids Hawaii


Fix Oahu!

Frontline: The Fixers

Genetic Literacy Project

Grassroot Institute

Hawaii Aquarium Fish Report

Hawaii Aviation Preservation Society

Hawaii Catholic TV

Hawaii Christian Coalition

Hawaii Cigar Association

Hawaii ConCon Info

Hawaii Debt Clock

Hawaii Defense Foundation

Hawaii Family Forum

Hawaii Farmers and Ranchers United

Hawaii Farmer's Daughter

Hawaii Federation of Republican Women

Hawaii History Blog

Hawaii Jihadi Trial

Hawaii Legal News

Hawaii Legal Short-Term Rental Alliance

Hawaii Matters

Hawaii Military History

Hawaii's Partnership for Appropriate & Compassionate Care

Hawaii Public Charter School Network

Hawaii Rifle Association

Hawaii Shippers Council

Hawaii Together


Hiram Fong Papers

Homeschool Legal Defense Hawaii

Honolulu Navy League

Honolulu Traffic

House Minority Blog

Imua TMT

Inouye-Kwock, NYT 1992

Inside the Nature Conservancy

Inverse Condemnation

July 4 in Hawaii

Land and Power in Hawaii

Lessons in Firearm Education

Lingle Years

Managed Care Matters -- Hawaii

Missile Defense Advocacy

MIS Veterans Hawaii

NAMI Hawaii

National Parents Org Hawaii

NFIB Hawaii News

NRA-ILA Hawaii


OHA Lies

Opt Out Today

Patients Rights Council Hawaii

Practical Policy Institute of Hawaii

Pritchett Cartoons

Pro-GMO Hawaii

Rental by Owner Awareness Assn

Research Institute for Hawaii USA

Rick Hamada Show

RJ Rummel

School Choice in Hawaii

Talking Tax

Tax Foundation of Hawaii

The Real Hanabusa

Time Out Honolulu

Trustee Akina KWO Columns

West Maui Taxpayers Association

What Natalie Thinks

Whole Life Hawaii