S&P cuts Horizon Lines

Standard & Poor's said it assigned its B+ corporate credit rating to Horizon Lines Holding Corp. and lowered its ratings on subsidiary Horizon Lines LLC to B+ from BB-.

Ratings on Horizon Lines LLC were removed from CreditWatch, where they were placed on May 26 following the announcement that The Carlyle Group had agreed to sell its interest in Horizon Lines to Castle Harlan Inc., another private equity firm. The transaction will result in a new entity, Horizon Lines Holdings Corp., which will include Horizon Lines LLC as one of its subsidiaries.

At the same time, S&P said it assigned its B+ rating to the company's $25 million secured revolving credit facility due 2009, its B+ rating to the company's $250 million secured term loan due 2011, and its B- rating to the company's proposed $250 million senior unsecured notes due 2012. Horizon Lines Holdings Corp. and Horizon Lines LLC are co-issuers and co-borrowers of the bank facility and notes offering.

Proceeds from the bank facility and senior secured notes will be used to finance Castle Harlan's $650 million acquisition of the company from The Carlyle Group.

The outlook is stable.

S&P said ratings on Horizon Lines reflect its high debt leverage, participation in the capital-intensive and competitive shipping industry, and an aging fleet. These risks are somewhat offset by the barriers to entry afforded by the Jones Act (which applies to intra-U.S. shipping) and the stable demand from the company's diverse customer base across the company's various markets.

© 2015 Prospect News.
All content on this website is protected by copyright law in the U.S. and elsewhere. For the use of the person downloading only.
Redistribution and copying are prohibited by law without written permission in advance from Prospect News.
Redistribution or copying includes e-mailing, printing multiple copies or any other form of reproduction.