Moody's may cut Horizon Lines

Moody's Investors Service said it placed the ratings of Horizon Lines LLC under review for possible downgrade. The affected ratings include the $25 million senior secured revolver due 2007, rated Ba3; the $175 million senior secured term loan B due 2008, rated Ba3; the senior implied rating of Ba3; and the unsecured issuer rating of B1.

The review was prompted by the company's announcement that it has signed a definitive agreement along with its current owner, the Carlyle Group, to sell the company to New York-based private equity investment firm, Castle Harlan LLC, for $650 million in cash.

Moody's said the review of the senior implied rating will focus on the impact of the acquisition financing on the capital structure and credit statistics of the company post-acquisition. To the extent that the acquisition will be funded by debt, the ratings will be subject to downward revision if increased leverage were to put additional stress on the company's debt protection measures or cash flow generation. It is likely that the existing bank facilities will be refinanced as part of the proposed transaction.

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