HEAVILY fined Horizon Lines, America's biggest carrier, got a break from lenders, who waived rights in an expected default by easing the terms of their lending agreements after the disgraced company pleaded guilty to price-fixing in the Puerto Rican trade.Facing a US$45 million fine, Horizon is seeking to refinance long-term debt and persuaded lenders to waive default rights brought about by the unprovisioned expense of the fine.
Federal sentencing guidelines called for a fine of $336 million to $672 million, based on Horizon's estimated $1.4 billion in Puerto Rico freight revenue from 2002 to 2008, reports Newark's Journal of Commerce.
Horizon also faces suits from rivals Sea Star and Crowley Maritime, which seek compensation for civil antitrust lawsuits from shippers claiming losses from the price-fixing.
Prosecutors said the fine was "the most Horizon could afford to pay without substantially jeopardising its continued viability and its ability to pay restitution".
The lenders' new terms call for Horizon to pay 2.5 per cent more interest on its senior credit facility, which as of December 26, stood at an adjustable rate of 3.29 per cent for a revolver loan and 6.02 per cent for a term loan.
Prosecutors said the fine was "the most Horizon could afford to pay without substantially jeopardising its continued viability and its ability to pay restitution".
The lenders' new terms call for Horizon to pay 2.5 per cent more interest on its senior credit facility, which as of December 26, stood at an adjustable rate of 3.29 per cent for a revolver loan and 6.02 per cent for a term loan.
The agreement also includes reductions from $50 million to $20 million in Horizon's letter of credit commitment and from $20 million to $5 million.
"We very much appreciate the support of our lender group and recognise that the amended credit agreement is a vote of confidence in the future of our company," said Horizon chief financial officer Michael Avara.
Stephen Fraser, who replaces retiring Chuck Raymond as president and CEO this week, said: "We are confident that these discussions will result in a financially stronger company that is better positioned for the long term," he said.
"We very much appreciate the support of our lender group and recognise that the amended credit agreement is a vote of confidence in the future of our company," said Horizon chief financial officer Michael Avara.
Stephen Fraser, who replaces retiring Chuck Raymond as president and CEO this week, said: "We are confident that these discussions will result in a financially stronger company that is better positioned for the long term," he said.
Source : HKSG, 14.03.11.
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