Horizon Lines gets tenders for all 9%, 11% notes

By Angela McDaniels

Seattle, Aug. 15 - Horizon Lines, Inc. said it received tenders and consents for all of the 9% senior notes due 2012 of its subsidiaries Horizon Lines, LLC and Horizon Lines Holding Corp. and all of the 11% senior discount notes due 2013 of its subsidiary H-Lines Finance Holding Corp.

A tender offer for the notes expired at midnight ET on Monday. Before the tender offer began on July 17, there were about $197 million of the 9% notes and $104 million of the 11% notes outstanding.

For each $1,000 principal amount of 9% notes, the company will pay $1,086.17. The payout was determined on July 27 based on the sum of the present value on the payment date of $1,045, the redemption price on the first call date of Nov. 1, 2008, plus interest that would accrue from the most recent payment date until the first call date, in each case, discounted using the bid-side yield on the 4 7/8% U.S. Treasury note due Oct. 31, 2008 plus a fixed spread of 50 basis points.

For each $1,000 principal amount of 11% notes, the company will pay $1,018.94. The payout was determined on July 27 based on the sum of the present value on the payment date of $1,055, the redemption price on the first call date of April 1, 2008, discounted using a bid-side yield on the 4 5/8% U.S. Treasury note due March 31, 2008 plus a fixed spread of 50 bps.

The payouts include a consent fee of $30.00 for each $1,000 principal amount of notes tendered by 5 p.m. ET on July 30, the consent deadline. Horizon Lines will also pay accrued interest to the payment date, which was Aug. 8 for notes tendered by the consent deadline and Wednesday for the remaining notes.

About 95.82% of the 9% notes and 98.75% of the 11% notes were tendered before the consent deadline. The consents will allow the company to amend the indenture to eliminate substantially all of the restrictive covenants.

Horizon Lines said previously it plans to finance the tender with proceeds from the sale of $300 million of convertible debt and with a new credit facility consisting of $125 million term loan and $200 million revolver, which will replace the company's existing facilities.

Goldman, Sachs & Co. (800 828-3182 or 212 357-0775) was the dealer manager and solicitation agent for the tender offer, and D.F. King & Co., Inc. (800 714-3313) was the information agent.

The container shipping and logistics company is based in Charlotte, N.C.

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