Moody's affirms Horizon Lines

Moody's Investors Service said it affirmed all ratings of H-Lines Finance Holdings Corp. (senior implied B2) as well as debt issued by its principal operating subsidiary Horizon Lines LLC in response to Horizon Lines' recent announcement regarding its proposed initial public offering and debt repayment plans.

Moody's affirmed H-Lines Finance Holdings Corp.'s $160 million 11% senior discount notes due 2013 at Caa2 and its senior unsecured issuer rating at Caa2 and Horizon Lines LLC's $25 million senior secured revolving credit facility due 2009 and $250 million senior secured term loan B due 2011 at B2 and its $250 million 9% unsecured senior notes due 2012 at B3.

On March 2, Horizon Lines Inc., the parent company of H-Lines Finance Holdings Corp., announced plans to proceed with a proposed initial public offering of common stock.

The proceeds of this offering are intended to be used towards an about $131 million return of capital to shareholders, while about $96 million is intended to be used to repay the company's debt.

While Moody's said it considers the potential debt repayment through the use of publicly-raised equity to be a favorable credit development, the rating agency said the amount of debt reduction planned will not have a sufficient impact on Horizon Lines' credit fundamentals to change the rating at this time.

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