Horizon prices tender offer for 9%, 11% notes

By Susanna Moon

Chicago, July 31 - Horizon Lines, Inc. said it determined the payout on its tender offer and consent solicitation for all the 9% senior notes due 2012 of its subsidiaries Horizon Lines, LLC and Horizon Lines Holding Corp. and for all the 11% senior discount notes due 2013 of its subsidiary H-Lines Finance Holding Corp.

For each $1,000 principal amount of 9% notes, the company will pay $1,086.17 including a $30 consent fee for notes tendered by the consent deadline. The payout was determined at 2 p.m. ET 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 4.875% 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 including a $30 consent fee for notes tendered by the consent deadline. The payout was determined at 2 p.m. ET 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 4.625% U.S. Treasury note due March 31, 2008 plus a fixed spread of 50 basis points.

Holders who tender their notes after the consent deadline and before the tender expiration will receive the total payout minus the consent fee of $30. The company also will pay accrued interest on tendered notes.

As of July 30, 95.82% of 9% notes and 98.75% of the 11% notes were tendered.

Horizon announced the tender offer on July 17 for about $197 million of the 9% notes and $104 million of the 11% notes outstanding.

The consent solicitation expired at 5 p.m. ET on July 30. The tender offer ends at midnight ET on Aug. 13. The initial payment date is Aug. 8.

The company 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.

The company said it also received the required consents to amend the indenture to eliminate substantially all of the restrictive covenants. The tender offer is subject to the completion of the new financing.

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

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

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