Horizon Lines Reaches Puerto Rico Class Action Settlement Agreement and Successfully Amends Credit Agreement
Puerto Rico Class Action Settlement Agreement
As previously reported, several purported class action lawsuits were filed against Horizon Lines and other domestic shipping carriers on behalf of a class of individuals and entities who purchased domestic ocean shipping services from various domestic ocean carriers in the
$5 millionwithin five business days following execution of a settlement agreement and submission of a motion for preliminary approval to the district court; $5 millionwithin 90 days after preliminary approval of the settlement agreement by the district court; and $10 millionwithin five business days after final approval of the settlement agreement by the district court.
The base-rate freeze component of the settlement agreement provides that class members who have contracts in the
The settlement agreement is subject to Court approval. In addition, Horizon Lines has the right to terminate the settlement agreement under certain circumstances.
As previously reported, Horizon Lines received a grand jury subpoena and search warrant from the U.S. District Court for the Middle District of
Credit Agreement Amendment
Horizon Lines also reached an agreement with its lenders to amend the existing credit agreement in conjunction with the
The agreement will amend the definition of Consolidated EBITDA by:
- Adding certain charges related to the
Puerto Ricosettlement back to the calculation of Consolidated EBITDA, and
- Adding certain charges for litigation expenses related to antitrust litigation matters in an amount not to exceed
$25 millionin the aggregate and $15 millionover a 12-month period back to the calculation of Consolidated EBITDA.
The definition of Consolidated EBITDA is used to determine whether Horizon Lines is in compliance with its secured leverage ratio and interest coverage ratio, as well as its ability to make certain restricted payments.
As consideration for the amendment, Horizon Lines has agreed to provide the following economic and structural changes for the benefit of the lenders:
- Increase loan and letter of credit pricing by 150bps and an increase in the commitment fee;
- A reduction in the size of the revolving facility from
$250 million to $225 million;
- The elimination of the
$150 millionincremental facility;
- An amendment to the definition of Consolidated EBITDA that clarifies “non-recurring charges”; and
- Other structural enhancements, including a step-down in the secured leverage ratio and further limitations on the ability to make certain restricted payments.
In addition, Horizon Lines has agreed to pay consent fees of
“We appreciate the support of our lender group in the amendment process that provided the clarity and flexibility necessary to effect this settlement,” said
About Horizon Lines
Horizon Lines, Inc. is the nation’s leading domestic ocean shipping and integrated logistics company comprised of two primary operating subsidiaries. Horizon Lines, LLC, owns or leases a fleet of 21 U.S.-flag containerships and operates 5 port terminals linking the continental
Forward Looking Statements
The information contained in this press release contains “forward-looking statements” within the meaning of the federal securities laws. These forward-looking statements are intended to qualify for the safe harbor from liability established by the Private Securities Litigation Reform Act of 1995. Forward-looking statements are those that do not relate solely to historical fact. They include, but are not limited to, any statement that may predict, forecast, indicate or imply future performance, achievements or events. Words such as, but not limited to, “believe,” “expect,” “anticipate,” “estimate,” “intend,” “plan,” “target,” “projects,” “likely,” “will,” “would,” “could,” and similar expressions or phrases identify forward-looking statements.
All forward-looking statements involve risk and uncertainties. In light of these risks and uncertainties, expected results or other anticipated events or circumstances discussed in this press release might not occur. We undertake no obligation, and specifically decline any obligation, to publicly update or revise any forward-looking statement, whether as a result of new information, future events or otherwise. See the section entitled “Risk Factors” in our Form
10-K filed with the SEC on
SOURCE Horizon Lines, Inc.