Horizon Lines plans to defease 6% convertibles due 2017 after merger

By Tali Rackner

Norfolk, Va., Nov. 13 – Horizon Lines Inc. announced that it will defease all of its 6% series A convertible senior secured notes due 2017 immediately after the completion of its merger with Matson Navigation Co., Inc., according to an 8-K filing with the Securities and Exchange Commission.

Immediately after the acquisition by Matson is completed, the company will deposit with a trustee sufficient cash to pay the principal and interest on the convertibles up until their maturity.

As long as there is no default, some covenants will be suspended, including those applying to the company’s obligation to furnish annual and quarterly reports to the trustee, those regarding restricted payments, those regarding restrictions on dividends and other distributions, incurrence of debt, incurrence of liens and affiliate transactions, and some of those regarding asset sales

The defeasance is subject to the satisfaction and discharge of all secured debt senior to the convertibles.

U.S. Bank NA is the trustee and collateral agent.

Horizon Lines is a Charlotte, N.C.-based domestic ocean shipping and integrated logistics company.

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