13 November 2014

[131114.EN.SEA] Sun Sets On Horizon As Carrier Broken Up, Sold to Matson, Pasha

HORIZON Lines, America's biggest shipping line, is being broken up and acquired by Hawaii's Matson Line and California-based Pasha Group, reports American Shipper.

The Charlotte, North Carolina-based Horizon owns a fleet of 13 fully Jones Act qualified vessels and operates five port terminals in Alaska, Hawaii and Puerto Rico.

Horizon faced near ruin in February 2011 when hit with a US Justice Department price-fixing fine of US$45 million - later cut to $15 million - as well as class action awards to shippers of more than $13 million. Near bankrupt, it was de-listed from the New York Stock Exchange.

But with help, it remained the only domestic carrier with container liner services to Alaska, Hawaii and Puerto Rico, and could trace its roots to the famous Sea-Land Service, the world's first container service started by Malcom McLean.

By chance 40 Sea-Land old timers had a reunion in Hong Kong last week, culminating in an evening's celebrations at the Maritime Museum adjacent to the Star Ferry Pier.

Honolulu-based Matson, which today has services to Hawaii, Guam and an eastbound service from China to the US, will expand into a new market, acquiring Horizon’s Alaska service.

Having its own legal troubles, Matson, despite declaring a 25.7 per cent third quarter net profit increase to US$21.5 million, had to pay a $2.1 million fine and other expenses for causing a molasses spill in Honolulu Harbour in September last year.

Horizon’s Hawaii operation will be sold to Pasha Group, a privately-owned San Rafael, California company that several years ago started service using a roll-on, roll-off service between San Diego and Hawaii.

Horizon said it plans to discontinue its service between Jacksonville and San Juan, Puerto Rico, due to continuing losses without the prospect of future profitability.

Matson will acquire all outstanding shares of Horizon Lines for $0.72 per share in an all-cash transaction. This represents a premium of 89 per cent over Horizon's closing stock price on November 10.

Pasha will acquire Horizon Lines' Hawaii trade lane business before the $141.5 million purchased is made. The proceeds from the Pasha transaction will reduce Horizon Lines' debt obligations before closing the deal, at which point Matson will assume outstanding debt.

Said Horizon chairman David Weinstein: “Both Matson and Pasha are well-positioned to serve our valued customers."

Said Matson CEO Matt Cox: "The acquisition of Horizon's Alaska operations is a rare opportunity to substantially grow our Jones Act business. We expect this to deliver immediate shareholder value through earnings and cash flow."

Source : HKSG.

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