[030411.EN.SEA] US Fines Will Bankrupt Horizon Lines Unless Saviour Is Found

HORIZON LINES concedes it faces bankruptcy unless lenders will reschedule its $576.6 million debt, but so far holders of $330 million in company bonds have refused more time as the firm faces a crippling US$45 million fine for price fixing.

"These conditions raise substantial doubt about Horizon Lines' ability to continue as a going concern," Ernst & Young said in a note attached to the annual report of the company that is ranked the world's 34th largest container shipping line by Paris-based Alphaliner.

Horizon, of Charlotte, North Carolina, operates a fleet of 21 US-flagged containerships and five port terminals linking the continental United States with Alaska, Hawaii, Guam, Micronesia and Puerto Rico.

Horizon has till May 21 to find a saviour, reports Newark's Journal of Commerce, which ranks it the 21st biggest. "If waivers or other relief are not obtained, we could be forced to seek reorganisation under federal bankruptcy laws," said the Jones Act carrier.

A default on the $330 million in bonds would also prompt credit facility default on which waivers were recently secured.

Prosecutors said the fine should have been between $336 million and $672 million, based on a standard formula, but was reduced to $45 million to avoid putting the company out of business. 

Horizon still faces civil claims from shippers and is negotiating with those, which opted out of a class action settlement of $20 million. Horizon said it had with Wal-Mart, which opted out of the class action suit, and was seeking settlements with others who had opted out too.

Source : HKSG, 31.03.11.