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S&P downgrades Horizon Lines, rates notes CCC+
Standard & Poor's said it lowered its ratings on Horizon Lines Holding Corp. and subsidiary Horizon Lines LLC, including lowering the corporate credit ratings to B from B+. More specifically, S&P lowered Horizon Lines Holding Corp.'s senior secured debt to B from B+ and senior unsecured debt to CCC+ from B- as well as Horizon Lines LLC's senior secured bank loan rating to B from B+ and senior unsecured debt to CCC+ from B-.
At the same time, S&P assigned its CCC+ debt rating to the company's proposed $110 million senior unsecured note offering due 2012.
Net proceeds from the bond offering will be used to refinance $53 million of convertible notes and distribute $50 million to equity holders.
S&P said the downgrade reflects higher leverage and a more aggressive financial policy. The increase in debt shortly following the highly leveraged acquisition by Castle Harlan and use of debt to reward shareholders will delay previously anticipated improvements in credit protection measures.
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