Horizon Lines Stockholders Approve 1-for-25 Reverse Stock Split at Special Stockholder Meeting.
Horizon Lines, Inc. (OTCQB: HRZL) announced that stockholders at the company's special stockholders meeting on December 2, 2011, voted to approve, among other things, a 1-for-25 reverse stock split.
Stockholders also approved the other three proposals presented at the special meeting. Stockholders approved amending the company's certificate of incorporation to authorize the issuance of warrants in lieu of cash or redemption notes in consideration for "Excess Shares" to holders who cannot establish U.S. citizenship to facilitate compliance with the Jones Act. Stockholders also approved the company's restated certificate of incorporation to combine into one document all of the provisions of the prior certificate of incorporation, the elimination of certain inapplicable provisions and the amendments approved by stockholders at the special stockholders meeting. Additionally, stockholders approved the company's proposal to increase the authorized number of shares to 2.5 billion from 100.0 million; however, the share increase proposal would only have become effective if the reverse stock split had not been approved by stockholders.
Approximately 83.4% of the company's 56.6 million shares eligible to vote were represented in the voting, which was open to stockholders of record as of October 7, 2011. With the proposals passed, the company on December 7, 2011, filed its restated certificate of incorporation to, among other things, effect the 1-for-25 reverse stock split. The reverse stock split reduces the number of shares of common stock outstanding to 2.3 million from 56.7 million.
"The reverse stock split is a strategically important step that will help the company meet minimum stock price listing standards that are required by the national stock exchanges," said Stephen H. Fraser, Horizon Lines President and Chief Executive Officer. "The reverse split, when combined with our focus on executing the planned deleveraging of our existing indebtedness and successful execution of our business plan, should help Horizon attract quality investors and analysts over time."
As previously disclosed, the company's recapitalization plan announced in October allows, in certain circumstances, Horizon Lines to reduce outstanding debt by $49.7 million in January by mandatorily converting a portion of the 6.00% convertible Series B notes for common stock or warrants at $18.25 per share (post split). Horizon Lines also has the opportunity to reduce debt by another $49.7 million in July 2012 by issuing equity or warrants at $18.25 per share (post split) through a mandatory conversion of the Series B notes, provided certain conditions are satisfied. Additionally, beginning October 5, 2012, the company has the right to convert, at its option, in whole or in part, into common stock or warrants approximately $178.8 million of 6.00% Series A convertible notes, provided that the 30-trading-day, volume-weighted average price of the common stock is at least $15.75 (post split) per share at the conversion date.
Horizon Lines, Inc. owns or leases a fleet of 20 U.S.-flag containerships and operates five port terminals linking the continental United States with Alaska, Hawaii and Puerto Rico. The company also provides integrated, reliable and cost competitive logistics solutions. Horizon Lines, Inc., is based in Charlotte, NC, and trades on the OTCQB Marketplace under symbol HRZL.