Ship Finance Terminates Charters With Horizon

(Press Release)
Friday, April 13, 2012

Ship Finance International Limited (NYSE:SFL) has agreed to terminate chartering agreements with Horizon Lines, LLC relating to five of its vessels. Ship Finance will receive as termination compensation $40 million in second lien notes issued by Horizon Lines and warrants exercisable into ten percent of the common stock of Horizon Lines, Inc. as part of the restructuring outlined below.

The 2,824teu vessels were built in Korea in 2006 and 2007, and have been chartered to Horizon Lines for an average of approximately 5 years. The original bareboat charter term was for 12 years, but following the termination of the Horizon Lines charters, Ship Finance will employ the vessels in the time-charter market instead. The break-even rate per day per vessel (after interest, debt amortization and estimated operating expenses) will be approximately $10,500 for the first 18 months and thereafter approximately $14,500 per day for the next 66 months.
The issuance of the $40 million of notes is part of a comprehensive restructuring of Horizon Lines.  The notes will be part of a total of approximately $140 million of second lien notes, and junior to approximately $225 million of first lien notes.  The notes will mature in October 2016 and interest is payable semi-annually, first time in October 2012. The annual interest rate will be 13% if paid in cash, 14% if paid 50/50 in cash and newly issued bonds and 15% if paid in newly issued bonds only.
As security for the bonds, Horizon Lines has pledged essentially all of its assets, including 12 owned vessels in its U.S. Jones Act business.  Horizon Lines will have the option to redeem the notes at 106% starting in October 2013, at 103% starting in October 2014 and at par starting in October 2015.
In addition, as part of Horizon Lines' overall restructuring, holders of its remaining $228 million of Convertible Senior Secured Notes converted their notes into common stock (or warrants for non-U.S. citizens). Following this conversion of Convertible Senior Secured Notes and the issuance of the $40 million of notes to Ship Finance, Horizon Lines, Inc.'s total funded debt will be reduced from approximately $593 million as of March 31, 2012 to approximately $404 million.
CEO of Ship Finance Management AS, Ole B. Hjertaker, said in a comment:  "We are pleased with the outcome of this comprehensive restructuring of Horizon Lines. The vessels are only five years old on average and of good quality and design. Even though the container chartering market currently is soft, we believe there is a good potential for improvements from current levels and our break-even rates are significantly below the historical average."
Mr. Hjertaker continued: "The redelivery of the five vessels to Ship Finance will enable Horizon Lines to focus entirely on its core domestic U.S Jones Act container market, and Horizon Lines should be well positioned to deliver positive results going forward. Ship Finance will become a large stakeholder in the restructured Horizon Lines and expects to benefit from both the interest on the notes as well as the value of securities received."
 
Maritime Reporter May 2015 Digital Edition
FREE Maritime Reporter Subscription
Latest Maritime News    rss feeds

People & Company News

Solarworld Wants Duties on Chinese Solar Goods in U.S. Extended

German solar manufacturer SolarWorld will apply to the United States for an extension of duties on Chinese panel imports that are due to end this year, weekly Euro am Sonntag said.

Sea Urchin Haven Disturbed by Oil Spill

Stephanie Mutz makes a living plucking sea urchins from the Santa Barbara coast and selling the prickly treasure to upscale restaurants in Southern California.

5 Tunisian Migrants Die in Shipwreck

At least five Tunisian migrants died on Saturday when their boat sailing to Italy capsized off the Tunisian coast, officials said. "A migrant boat carrying

Finance

Solarworld Wants Duties on Chinese Solar Goods in U.S. Extended

German solar manufacturer SolarWorld will apply to the United States for an extension of duties on Chinese panel imports that are due to end this year, weekly Euro am Sonntag said.

Sea Urchin Haven Disturbed by Oil Spill

Stephanie Mutz makes a living plucking sea urchins from the Santa Barbara coast and selling the prickly treasure to upscale restaurants in Southern California.

Viking Orders 2 Liebherr Cranes

An LR 1300 with super lift equipment and an LR 1160 crawler crane will strengthen the fleet of Viking Cranes. The Tallinn-based company with branch offices

Container Ships

KPCT Launches New Gulf Service

Containerized volumes are steadily increasing on the East Coast of India. Keeping pace with the growth, Krishnapatnam Port Co. Ltd. (KPCT) now offers a new service to the Gulf sector.

Shipping Freight Rates Drop Amidst Overcapacity

Shipping freight rates on the world's busiest route, from Asia to Northern Europe, fell by the largest percentage amount since 2008, reflecting wild volatility

HSH Bank to Split Off Bad Shipping Loans

German lender HSH Nordbank could split off a "bad bank" for non-performing shipping loans as part of a plan to create a sustainable business model, according to a person familiar with the matter.

 
 
Maritime Careers / Shipboard Positions Maritime Contracts Maritime Security Naval Architecture Offshore Oil Pipelines Port Authority Salvage Shipbuilding / Vessel Construction Sonar
rss | archive | history | articles | privacy | contributors | top maritime news | about us | copyright | maritime magazines
maritime security news | shipbuilding news | maritime industry | shipping news | maritime reporting | workboats news | ship design | maritime business

Time taken: 0.2257 sec (4 req/sec)