[150611.EN.SEA] Horizon Rescued After Refinancing Deal With Bond Holders

HORIZON Lines, United States' largest domestic ocean carrier, said it has won consent of bondholders of US$330 million in the issue of 4.25 per cent convertible senior notes to re-capitalise the business.

This announcement came just as Horizon was threatened with delisting from the New York Stock Exchange because of substandard capitalisation and stockholder equity. The troubled company was put into desperate straits because of a $15 million price fixing fine, which the US Justice Department had reduced from $45 million.

Horizon's current debt structure consists of a $225 million senior secured revolving credit facility, a $125 million secured term loan, and $330 million of unsecured 4.25 per cent convertible senior notes, said a company statement.

The refinancing scheme enables bondholders the exchange of the notes for $200 million in six per cent convertible secured notes, and to have a cash payment of $80 million plus 38.5 million shares of common stock - 56 per cent of the company's outstanding stock.

"Re-capitalisation will eliminate the refinancing risk related to the maturity of the existing convertible notes and the existing bank debt in 2012, and will provide liquidity to fund continued operations," said the company. 

Source : HKSG.