Horizon announces financial restructuring
Horizon Lines said Wednesday it has reached a deal with a group of note holders “for a transaction that will refinance the company’s entire capital structure.”
It said under the plan, holders of most of its $330 million of unsecured 4.25 percent convertible unsecured notes would exchange their existing debt for:
' Common stock, 38.5 million shares, which would be 56 percent of the company’s capital stock at closing.
' Cash, $80 million.
' A new series of $200 million, 6 percent convertible secured notes, maturing in five and a half years and convertible into common stock at $1.70 per share.
In March, the company had warned it might default on those notes because of an inability to obtain a default waiver from the note holders after the company was fined $45 million by the U.S. Justice Department for its role in a conspiracy to fix rates in the Puerto Rico trade. But the government later decided to slash that fine to $15 million, payable over five years.
Horizon said the deal with the holders of the 4.25 percent notes would be in conjunction with a new asset-based revolving loan facility of up to $125 million.
The agreement also provides that the company will sell to certain qualified institutional buyers new, first-lien $350 million, 9 percent senior secured notes due five years from the date of issuance.
The company said the refinancing is expected to occur in August. During and after the recapitalization process, Horizon said it “intends to conduct business as usual throughout its trade lanes.”