Are IMO regulations tough enough to keep national governments from imposing stricter measures?

Only partly
No--expect a slew of regional regs!

Marine Log

August 9, 2007

Horizon Lines completes refinancing, ups guidance

Horizon Lines, Inc. (NYSE: HRZ) reported today that it has closed on all transactions related to a previously announced capital structure refinancing. Earnings and free cash flow guidance for the third quarter and full year 2007 were also increased in recognition of the benefits resulting from the refinancing.

"Horizon Lines closed on a refinancing of our capital structure yesterday that will yield significant benefits in terms of a lower cost of capital, improved cash flow, enhanced flexibility and greater liquidity," said Chuck Raymond, Chairman, President and Chief Executive Officer.

"This new capital structure represents an opportunistic refinancing that is cash flow positive, EPS accretive and provides access to low cost capital that will allow us to take advantage of future growth opportunities", said Mark Urbania, Senior Vice President and Chief Financial Officer. "We are pleased with the very successful execution of this refinancing in a challenging credit market and believe the refinancing demonstrates the market's confidence in Horizon Lines and its strategy".

Horizon Lines has completed a series of transactions through which it:

Repaid the $193.1 million balance, interest and fees on its previous LIBOR plus 2.25% senior credit facility.

Repaid the $314.3 million balance, call premiums and interest on its previous 9% senior notes and 11% senior discount notes.

Entered into a new $375.0 million senior credit facility at LIBOR plus 1.50% with initial borrowings of $258.5 million.

Issued $330.0 million of 4.25% convertible notes.

Entered into separate hedging transactions at a net pretax cost of $40.6 million or $24.6 million after future tax benefits to increase the conversion premium on the convertible notes from 30% to 80%.

Purchased 1 million shares of its common stock for $28.6 million.

Paid transaction costs of $11.8 million.

Interest savings from the new structure are expected to be $1.7 million on a pretax basis or $1.2 million after tax in the third quarter, and $5.0 million pretax or $3.5 million after tax for 2007, under current accounting methods. Interest expense savings in 2008 are expected to be $15.0 million on pretax basis or $10.5 million on an after tax basis, under current accounting methods.

As a result of the refinancing, the company is increasing its financial guidance. Earnings per share guidance for the third quarter is being increased to $.59 - $.66 and earnings per share guidance for 2007 is being increased to $1.56 - $1.68, both excluding the impact of one-time expenses. Horizon Lines' previous earnings guidance for earnings per share was $.56 - .63 for the third quarter and $1.46 - $1.58 the full year 2007.

Free cash flow guidance for 2007 was also increased to reflect the benefits of the refinancing to $34 - $41 million from the previous $30 - $37 million. Free cash flow benefits in 2008 are expected to be $13 million.