Wednesday, June 12, 2024
Hawai'i Free Press

Current Articles | Archives

Tuesday, April 10, 2012
Horizon Lines Completes Restructuring
By News Release @ 6:51 PM :: 8552 Views :: Energy, Environment, National News, Ethics


News Release from Horizon Lines, April 10, 2012

Company to File 2011 Form 10-K and Report Fourth-Quarter Financial Results Today
CHARLOTTE, NC, April 10, 2012 – Horizon Lines, Inc. (OTCQB: HRZL) today announced that it has completed transactions with more than 99% of its noteholders, and with Ship Finance International Limited (“SFL”) and certain of its subsidiaries, to substantially deleverage the Company’s balance sheet and terminate vessel charter obligations related to its discontinued trans-Pacific service. 

These simultaneous transactions eliminate virtually all of the remaining $228.4 million of the Company’s 6.00% Series A and Series B Convertible Secured Notes, partially offset by the issuance of $40.0 million of debt to SFL as part of the full and final settlement of the vessel charter obligations, resulting in a net debt reduction of $188.4 million. The Company’s earnings and cash flows will be further improved by the termination of $32.0 million in annual vessel charter obligations for the five ships leased from SFL, as well as the elimination of approximately $3.0 million of annual lay-up costs for the idle vessels. 

“These transactions successfully close a chapter in the history of Horizon Lines that we have been working diligently to complete for these past many months,” said Stephen H. Fraser, interim President and Chief Executive Officer. “Horizon Lines moves forward today from a stronger financial position that will enable us to better focus on customers in our core Jones Act trades and to invest in the future of our business. We greatly appreciate the support of our noteholders and SFL during the final steps of this process, and also thank our associates, customers, labor partners, and vendors for their loyalty and faith in Horizon Lines.”

Under the transactions announced today:
• Substantially all of the remaining $228.4 million of the Company’s 6.00% Series A and Series B Convertible Senior Secured Notes are being converted into stock, or warrants for non-U.S. citizens, equivalent to 83.5% of the Company’s common stock on a fully converted basis.
• Subsidiaries of SFL are releasing the Company from its remaining charter obligations, totaling $220.8 million over seven years. In exchange, the Company has provided SFL with $40.0 million in aggregate principal amount of Second Lien Senior Secured Notes due 2016 pursuant to the Indenture dated October 5, 2011, plus warrants equivalent to 10.0% of the Company’s shares outstanding on a fully converted basis upon completion of the transaction.
• Existing holders will maintain a stake of 6.5% in the Company’s stock. This includes approximately 1.4% for existing equity holders and approximately 5.1% for noteholders who received stock or warrants in the October 5, 2011 refinancing and as part of the mandatory debt-to-equity conversion on January 11, 2012. Upon completion of the transactions, the noteholders and SFL, respectively, will own stock and warrants equivalent to approximately 88.6% and 10.0%, of the Company’s common stock on a fully converted basis. 
• In addition, 7.5 million authorized, but unissued shares, are being reserved for future management incentive plans. 

The elimination of the vessel lease obligations saves Horizon Lines $32.0 million annually through 2018, and $4.8 million in 2019, as well as associated vessel lay-up costs of $3.0 million per year, assuming the five vessels were to remain inactive. As a result of the transactions, the Company’s total funded debt outstanding will be reduced to approximately $404.4 million, from $592.8 million at March 31, 2012. 

“The significant deleveraging resulting from these transactions greatly improves the Company’s cash flow and liquidity, allowing for greater financial flexibility and stability,” said Michael T. Avara, Executive Vice President and Chief Financial Officer. “As a result, Horizon Lines is now better positioned for improved profitability and sustained investment in our business.”

The Company will file its 2011 Form 10-K Annual Report and fourth-quarter financial results later today.

In conjunction with the transactions, Horizon Lines announced that it is reducing the size of its Board of Directors to seven members from 11, effective immediately, and that Board member Jeffrey A. Brodsky is succeeding Alex J. Mandl as Chairman. Mr. Mandl is retiring from the Board, along with William J. Flynn, Bobby J. Griffin and Carol B. Hallett. Mr. Fraser remains interim President and Chief Executive Officer until a new Chief Executive Officer is named. 

“I want to express our Board’s sincerest appreciation to Msrs. Mandl, Flynn, Griffin and Ms. Hallett, for their unwavering commitment to Horizon Lines,” said Mr. Brodsky. “As Chairman, Mr. Mandl has guided our Board with steadfast and exceptional leadership through a very challenging period. We are truly grateful to Mr. Mandl and to the other retiring Board members for their exemplary service and dedication to Horizon Lines. Today’s announced transactions solidify the Company’s financial position, allowing a smaller Board to guide the company forward.”

Kirkland & Ellis LLP served as legal advisor and Houlihan Lokey Capital, Inc. served as financial advisor to the Company. Latham & Watkins LLP served as legal advisor to SFL. Paul, Weiss, Rifkind, Wharton & Garrison LLP served as legal advisor to the noteholders. 

read … News Release



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