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Horizon Offshore working to refinance term loan, revolver
By Jeff Pines
Washington, Dec. 30 - Horizon Offshore Inc. said it is working with a prospective lender to refinance all its term loans and revolvers with Southwest Bank of Texas NA and the CIT Group/Equipment Financing Inc.
On Sept. 30, Horizon had $73.1 million in seven term facilities and $57.7 million in its three revolvers. Company officials were unavailable to provide more current data.
The Southwest Bank facilities mature in January, and the CIT Group facilities mature in May.
Horizon, a Houston-based marine construction services business, said it is working with its senior lenders and its subordinated note holders to obtain all required consents and support to allow the proposed refinancing to proceed.
If the company succeeds in refinancing its maturing debt it will go ahead with its equity recapitalization in the first quarter.
The recapitalization agreement calls for Horizon to make a rights offering for more common shares to its shareholders. If the offering is undersubscribed, the plan calls for the company's 16% and 18% subordinated notes to be converted into common stock. The recapitalization agreement is with the holders of $80 million of its notes.
If $65 million of the subordinated notes are prepaid or converted into equity then the investors acquiring the rights or converting their notes will hold 95% of Horizon's fully diluted common stock. Horizon estimates its stock price will suffer a steep drop because there will be a "substantial number of shares of common stock issued at a significant discount to the recent trading price," the company said in its 10-Q filed with the Securities and Exchange Commission in November.
The proposed recapitalization will leave the company with $45 million of subordinated notes outstanding.
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