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Saturday, October 1, 2016

Horizon Lines Completes Mandatory Debt Conversion

January 12, 2012

$49.7 Million of 6.00% Series B Mandatorily Convertible Senior Secured Notes Exchanged for Common Stock and Warrants.

 

Horizon Lines, Inc. has announced that it has completed the mandatory debt-to-equity conversion of approximately $49.7 million of the company's 6.00% Series B Mandatorily Convertible Senior Secured Notes (the "Series B Notes").  The mandatory conversion reduces debt, lowers annualized interest payments and is expected to increase the value of the company's shares outstanding.  Under the terms of the company's recapitalization plan that was undertaken in October 2011, the Series B Notes are mandatorily convertible into shares of common stock or warrants in two equal installments on the three-month and nine-month anniversaries of their issuance, subject to certain conditions. 

 

In accordance with these terms, on January 10, 2012, the company mandatorily converted approximately $49.7 million of the Series B Notes at a conversion rate of 54.7196 shares of common stock (reflecting the 1-for-25 reverse stock split of the company's common stock effective December 7, 2011) per $1,000 principal amount of Series B Notes.  Approximately $18.5 million of the Series B Notes were converted into 1,014,839 shares of common stock with the remainder being converted into warrants exercisable into shares of common stock.  The distribution of common stock and warrants was based upon the U.S. citizenship verifications of the holders of the Series B Notes. Foreign holders, or holders who did not provide proof of U.S. citizenship, received warrants exercisable by U.S. citizens into an applicable quantity of common stock.  All fractional interests were paid in cash.

 

"This mandatory conversion reduces the company's annualized interest payments by approximately $3.0 million and represents a major step in deleveraging the company's balance sheet under the opportunities provided by our new capital structure," said Stephen H. Fraser, President and Chief Executive Officer.  "Affording us the ability to decrease debt is an essential component of the refinancing structure that we put in place last October with the help of our note holders. Issuing stock as a means to replace debt also allows us to immediately increase the total market value of our equity, as well as build shareholder value over time."

 

Subject to certain conditions, the remaining approximately $49.7 million in aggregate principal amount of the Series B Notes is scheduled to be mandatorily converted into shares of common stock and warrants in July 2012. The Series B Notes will be automatically converted into 6.00% Series A Convertible Senior Secured Notes due 2017 on October 5, 2012 if the company is unable to effect mandatory conversion before then.



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