Horizon Lines, Inc. (NYSE:HRZ) Skyrockets Capital Restructuring

Horizon Lines, Inc. (NYSE:HRZ) trades at $1.32 currently with a rise of 29.41% after hitting a high of $1.56 and a low of 1.29 as of now and at nearly double the average volume of 2.31 million at 5.18 millions. Its market cap amounts to 40.46 millions.

The Company announced on Wednesday that it and holders of the majority of its 4.25% convertible senior notes have entered into agreements for a transaction that will have the effect of refinance the company’s entire capital structure.

This agreement with these note holders contemplates a complete refinancing, in addition with a new asset-based revolving loan facility (ABL) of nearly $125 million, which is under negotiation with a leading financial institution.

Its current debt structure consists of senior secured revolving credit facility amounting $225 million; a $125 million secured term loan, and $330 million of unsecured 4.25% convertible senior notes.

During the recapitalization process and even after its completion, the company intends to conduct business in normal manner throughout its tradelanes, while focusing on continued customer service excellence and operational efficiencies.

The completion of the refinancing is expected to occur in August, after the finalization of documentation and completion of the exchange offer for the company’s existing 4.25% convertible senior notes, which by law requires 20 business days to execute.

As per the terms of agreements it provides that the company shall sell to certain qualified institutional buyers new first-lien $350 million, 9% senior secured notes due five years from the date of issuance. However the Company will retain the right to redeem the new 9.0% notes without paying a premium at any time between closing and maturity.

The agreements also includes terms according to which the company will offer to exchange the existing $330 million of unsecured 4.25% convertible senior notes for a fresh series of $200 million 6.0% convertible secured notes, which shall mature in five and a half years and convertible into common stock at $1.70 per share; a cash payment of $80 million; and nearly 38.5 million shares of common stock, which would comprise about 56% of the outstanding capital stock of the company at closing.

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