CHARLOTTE, N.C., Oct. 5, 2011 /PRNewswire/ -- Horizon Lines, Inc.
(NYSE: HRZ) today announced that it has completed a comprehensive
refinancing of the company's entire capital structure. The
new capital structure addresses the company's financial needs by
providing adequate liquidity to fund continuing operations and the
ability to achieve substantial additional debt reduction.
"We now have a new capital structure that eliminates the
refinancing uncertainty faced by our company over the past several
months and better positions us for the future," said Stephen H. Fraser, President and Chief Executive
Officer. "We have put in place a solid financial foundation
that affords us the opportunity to grow our business and
significantly reduce debt over time."
The terms of the recapitalization, which results in a
$652.8 million financial
restructuring, consist of the following:
- Certain holders of the 4.25% convertible senior notes due 2012
(the "2012 convertible notes") and certain other parties purchased
$225.0 million of 11.00% first-lien
secured notes. The notes mature in October 2016, and are callable at 101.5% of the
aggregate principal plus accrued and unpaid interest in year one,
and at par plus accrued and unpaid interest thereafter.
- Certain holders of the 2012 convertible notes and certain other
parties also purchased $100.0 million
of second-lien secured notes, maturing in October 2016. The second-lien notes bear
interest, payable semi-annually at a rate of 13.00% per annum if
paid in cash, 14.00% per annum if paid 50% in cash and 50% in kind,
and 15.00% per annum if paid in kind, at the company's option.
The $100.0 million amount
includes second-lien notes that were issued in exchange for a
$25.0 million bridge loan that was
entered into in September 2011, with
the remaining $75.0 million issued at
par. The new second-lien secured notes are non callable for
two years. After that, they are callable at 106% of the aggregate
principal plus accrued and unpaid interest in year three, at 103%
plus accrued and unpaid interest in year four, and at par plus
accrued and unpaid interest thereafter.
- Additionally, the company and its subsidiaries entered into a
new, $100.0 million, asset-based
revolving credit facility arranged through Wells Fargo Capital
Finance, LLC to provide liquidity for continuing operations.
Availability under the ABL facility is based on a percentage
of eligible accounts receivable, up to a maximum of $100.0 million. The ABL facility matures in
October 2016, although the maturity
will accelerate by 90 days if the first-lien notes and second-lien
notes have not been repaid, refinanced or defeased by such date.
The ABL facility bears interest at a floating rate based on a
specified spread over LIBOR. The initial rate will be LIBOR plus
3.25%. No amounts were drawn at the closing date, although there
were $19.1 million of outstanding
letters of credit under the ABL facility, with $67.1 million available for borrowing.
- The company also completed its exchange offer and consent
solicitation, in which $178.8 million
of new 6.00% Series A convertible senior secured notes due
April 15, 2017, $99.3 million of new 6.00% Series B mandatorily
convertible senior secured notes, and $49.7
million of common stock and warrants, issued at $1.00 par value, were exchanged for the
$327.8 million of 2012 convertible
notes that were validly tendered in the exchange offer. In
total, 99.3% of the $330.0 million of
2012 convertible notes were validly tendered in the exchange offer.
Interest on the new notes is payable semi–annually in cash.
The Series A Notes are convertible at the option of the holders,
and at the company's option under certain circumstances beginning
on the one-year anniversary of their issuance, into shares of
common stock or warrants, as described below. The Series B Notes
are mandatorily convertible into shares of the company's common
stock or warrants in two equal installments of approximately
$49.7 million each on the three-month
and nine-month anniversaries of the consummation of the exchange
offer, subject to certain conditions, as described below.
"We greatly appreciate the support of our note holders, previous
lender group and the new lenders to facilitate this comprehensive
and complex refinancing in an orderly and timely manner," said
Michael T. Avara, Executive Vice
President and Chief Financial Officer. "We also are grateful
to our teams of advisors from Kirkland & Ellis LLP and Moelis
& Company for their expert advice, creativity and diligence
through this arduous process. Our thanks further extends to Paul,
Weiss, Rifkind, Wharton & Garrison LLP and Houlihan Lokey, who were the legal and financial
advisors, respectively, to the holders of the 2012 convertible
notes, for their important contributions."
In the exchange offer, the company issued 25.1 million shares of
common stock and 24.6 million warrants, based on the U.S.
citizenship verifications of the participating 2012 convertible
note holders.
Under terms of the new notes, and subject to certain conditions
(including, without limitation, having sufficient authorized shares
of common stock and the continued listing of the common stock), the
company has the right to convert the new Series B Notes into
$49.7 million of common stock or
warrants at approximately $0.73 per
share after January 5, 2012, and
another $49.7 million of common stock
or warrants at approximately $0.73
per share after July 5, 2012.
After October 5, 2012, subject
to certain conditions (including, without limitation, having
sufficient authorized shares of common stock and the continued
listing of the common stock), the company has the right to convert
into common stock or warrants the new Series A Notes at its option,
in whole or in part, and from time to time, at approximately
$0.45 per share, plus accrued and
unpaid interest, provided that the 30-trading-day, volume-weighted
average price of the common stock is at least $0.63 per share at the conversion date.
Proceeds from the first-lien notes and the second-lien notes
were used, among other things, to satisfy in full the company's
obligations outstanding under its previous first-lien revolving
credit facility and term loan, which totaled $265.0 million in principal and $1.4 million in accrued interest and fees.
In connection with the consent solicitation noted above, holders
of old notes consented to amend the indenture related to the 2012
convertible notes, and the company and the trustee executed a
supplemental indenture, removing or amending substantially all of
the restrictive covenants, as well as modifying certain of the
events of default and various other provisions contained in the old
indenture.
The company will file with the SEC a Current Report on Form 8-K
containing copies of the various agreements described herein.
About Horizon Lines
Horizon Lines, Inc. is the nation's leading domestic ocean
shipping and integrated logistics company. The company owns or
leases a fleet of 20 U.S.-flag containerships and operates five
port terminals linking the continental United States with Alaska, Hawaii, Guam,
Micronesia and Puerto Rico. The company provides express
trans-Pacific service between the U.S. West Coast and the ports of
Ningbo and Shanghai in China, manages a domestic and overseas service
partner network and provides integrated, reliable and cost
competitive logistics solutions. Horizon Lines, Inc., is based in
Charlotte, NC, and trades on the
New York Stock Exchange under the ticker symbol HRZ.
Forward Looking Statements
The information contained in this press release should be read
in conjunction with our filings made with the Securities and
Exchange Commission. This press release contains
"forward-looking statements" within the meaning of the federal
securities laws. Forward-looking statements are those that do
not relate solely to historical fact. They include, but are
not limited to, any statement that may predict, forecast, indicate
or imply future results, performance, achievements or events. Words
such as, but not limited to, "will," "intend," "expect," "would,"
"could," "must," "may," and similar expressions or phrases identify
forward-looking statements.
Factors that may cause expected results or anticipated events or
circumstances discussed in this press release to not occur or to
differ from expected results include: our ability to maintain
adequate liquidity to operate our business; our ability to
refinance, repay, or extend our indebtedness when it becomes due;
volatility in fuel prices; the cyclical nature of international
shipping industry and resulting volatile changes in freight rates;
decreases in shipping volumes; failure to comply with the terms of
our probation imposed by the court in connection with our plea
relating to antitrust matters; any new adverse developments
relating to antitrust matters in any of our trades; failure to
resolve or successfully defend pending and future civil antitrust
claims or our pending securities litigation; government
investigations related to environmental regulations including
recordkeeping and reporting requirements for vessel generated
pollution and any other government investigations and legal
proceedings; suspension or debarment by the federal government;
compliance with safety and environmental protection and other
governmental requirements; increased inspection procedures and
tighter import and export controls; repeal or substantial amendment
of the coastwise laws of the United
States, also known as the Jones Act; our ability to remain
Jones Act compliant because of changes in ownership; catastrophic
losses and other liabilities; the arrest of our vessels by maritime
claimants; severe weather and natural disasters; and the aging of
our vessels and unexpected substantial dry-docking or repair costs
for our vessels.
All forward-looking statements involve risk and uncertainties.
In light of these risks and uncertainties, expected results or
other anticipated events or circumstances discussed in this press
release might not occur. The forward-looking statements included in
the press release are made only as of the date they are made and
the company undertakes no obligation to update any such statements,
except as otherwise required by applicable law. See the section
entitled "Risk Factors" in our Form 10-K filed with the SEC on
March 28, 2011, for a more complete
discussion of these risks and uncertainties and for other risks and
uncertainties. Those factors and the other risk factors described
therein are not necessarily all of the important factors that could
cause actual results or developments to differ materially from
those expressed in any of our forward-looking statements. Other
unknown or unpredictable factors also could harm our results.
Consequently, there can be no assurance that actual results or
developments anticipated by us will be realized or, even if
substantially realized, that they will have the expected
consequences.
SOURCE Horizon Lines, Inc.