Castle Harlan seeks IPO for Horizon Lines

Castle Harlan seeks IPO for Horizon Lines    U.S. Jones Act specialist Horizon Lines Inc. today filed a registration statement with the U.S. Securities and Exchange Commission seeking an initial public offering of its stock.
   Acquired by the investment group Castle Harlan Group in July 2004, Horizon Lines said the stock exchange offering is being made through an underwriting syndicate led by Goldman, Sachs & Co. and UBS Investment Bank, who will act as joint book-running managers of the offering. Co-managers include Bear, Stearns & Co. Inc., Deutsche Bank Securities Inc. and J.P. Morgan Securities Inc.
   In its prospectus filed with the Securities and Exchange Commission, the company does not say what percentage of its equity will be sold through the IPO.
   However, Horizon Lines said it plans to use about $131.5 million of the net proceeds from this offering to redeem outstanding series A redeemable preferred stock at an aggregate cost of about $60.7 million and to pay a special dividend of about $70.8 million to holders of class B common stock. It intends to use the balance of the proceeds of this offering to repay debts.
   Horizon Lines intends to list its class A common stock on the New York Stock Exchange (NYSE) under the symbol “HRZ.” Senior management executives of Horizon Lines, including former Sea-Land executive Charles Raymond, own stock in the company.
   Following the near-disappearance of container shipping lines from stock markets in America, the Horizon Lines IPO could result in a stronger visibility of the sector on the NYSE, where shares of Canada-registered CP Ships are already traded.
   Formerly known as Sea-Land’s domestic arm and then as CSX Lines, Horizon Lines had revenues of $980 million and a net income of $14 million in 2004. Its total assets were $1 billion at the end of 2004.
   Horizon Lines is the largest Jones Act container shipping company, accounting for about 37 percent of total U.S. marine container shipments from the continental United States to the three non-contiguous Jones Act markets — Alaska, Hawaii and Puerto Rico, and to Guam. Under the Jones Act, domestic U.S. maritime trade is restricted to U.S. owners of U.S.-built and flagged vessels manned by predominantly U.S.-citizen crews. Horizon Lines has 16 vessels and about 22,400 containers.
   In late 2002, CSX Corp. sold CSX Lines to Carlyle Group for $300 million. Last year, Carlyle sold it to Castle Harlan, a private equity firm based in New York, for $650 million.
   The Charlotte-based shipping company also owns an information technology subsidiary that trades under the name Horizon.