Horizon Lines Cuts Debt, Some Lease Obligations, in Deal
Cargo shipper Horizon Lines, Inc. said it completed transactions with more than 99% of its noteholders, and with Ship Finance International Ltd. to substantially deleverage the company's balance sheet and terminate vessel charter obligations related to its discontinued trans-Pacific service.…
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The transactions eliminate virtually all of the remaining $228.4 million of the Company's 6% Convertible Secured Notes, partially offset by the issuance of $40 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 improved by the termination of $32 million in annual vessel charter obligations. Existing holders will maintain a stake of 6.5% in the Company's stock. This includes about 1.4% for existing equity holders and 5.1% for noteholders who received stock or warrants in the October 5, 2011, refinancing and the debt-to-equity conversion on January 11, 2012. Upon completion, the noteholders will own about 88.6% of the company and SFL 10.0%.