U.S.-flag containership operator Horizon Lines, Inc. (NYSE: HRZ) says it has entered into a credit agreement amendment with its lender group, effective March 9, 2011. The deal waives a default under the senior credit facility that would have arisen from the $45 million fine that the company has agreed pay under a plea deal to settle a Puerto Rico trade price fixing case. The amendment also adjusts the two financial covenants of the credit facility, providing relief from potential noncompliance under those covenants.
Under the amended agreement, Horizon Lines has agreed to a pricing increase of 2.50 percent per annum under the credit facility, an amendment fee of $0.5 million, as well as a reduction in the letter of credit commitment from $50 million to $20 million and in the swingline commitment from $20 million to $5 million.
Among other conditions, Horizon also has agreed not to issue a dividend, and certain reporting obligations. A copy of the credit agreement amendment is included as an exhibit to a current report on Form 8-K that Horizon Lines is filing with the SEC on March 11, 2011.
Extension of Consent Solicitation
As previously disclosed, Horizon Lines commenced a consent solicitation on March 1, 2011 with respect to its 4.25 percent Convertible Senior Notes due 2012 (the "Notes") seeking a waiver of certain defaults or events of default under the indenture governing the convertible senior notes that would have arisen from the $45 million fine that the company has agreed to pay to settle the Department of Justice investigation, upon acceptance of the Plea Agreement by the United States District Court for the District of Puerto Rico. At the request of certain noteholders, the company will extend the deadline for the consent solicitation until 5:00 pm EST on March 24, 2011 (such time and date, as may be extended, the "Consent Date"). The consent solicitation, the terms of which remain unchanged from those set forth in the Consent Solicitation Statement dated March 1, 2011, and the related Letter of Consent, was previously set to expire on March 10, 2011.
Citing "the considerable time and effort required to address the credit agreement amendment and consent solicitation process, and the additional time required to complete the analysis of the company's financial position and Form 10-K disclosures related to these efforts," Horizon Lines says it will file a Form 12b-25 notification with the SECn, extending the deadline for filing its Form 10-K annual report by 15 days. The company now plans to file its Form 10-K on or before March 28, 2011.
March 11, 2011