By Evan Weinberger
New York, Aug. 2 - Horizon Lines Inc. priced $300 million in convertible senior notes due Aug. 15, 2012 with a 4.25% coupon and an initial conversion premium of 30% Wednesday after market close.
The deal came in cheaper than talk, which had been for a coupon of 3.5% to 4% and an initial conversion premium of 30% to 35%.
Goldman Sachs, Banc of America Securities and Wachovia Securities are the bookrunners of the Rule 144A transaction.
There is a $30 million over-allotment option.
The conversion price is set at $37.13 and the conversion ratio is 26.9339. There is a contingent conversion feature with a 120% threshold and net share settlement.
The bonds are non-callable for life and there are no put options. There is fundamental change protection, but no public acquirer change of control waiver.
Horizon Lines plans to use the proceeds to buy back approximately 1 million shares of its common stock and to enter into convertible hedge transaction. The hedging will increase the effective premium from the company's point of view to 80%.
The company also plans to use the proceeds to help fund its July 17 offer to buy back up to $197 million of 9% senior notes due 2012 issued by its subsidiaries Horizon Lines, LLC and Horizon Lines Holding Corp. and up to $104 million of its 11% senior discount notes due 2013 issued by H-Lines Finance Holding Corp.
Horizon Lines also plans to replace its existing credit facility with a new credit facility consisting of a $125 million term loan and a $200 million revolver to fund the tender offer.
Horizon Lines is a Charlotte, N.C.-based container shipping and integrated logistics operations company.
Issuer: Horizon Lines Inc.
Issue: Convertible senior notes
Amount: $300 million
Greenshoe: $30 million
Maturity: Aug. 15, 2012
Coupon: 4.25%
Price: Par
Yield: 4.25%
Conversion price: $37.13
Conversion premium: 30%
Conversion ratio: 26.9339
| Contingent conversion: | 120%
|
| Call: | No
|
| Put: | No
|
| Bookrunners: | Goldman Sachs, Banc of America Securities and Wachovia Securities (joint)
|
| Distribution: | Rule 144A
|
| Pricing date: | Aug. 1, after close
|
| Settlement: | Aug. 8
|
| Talk: | 3.5%-4% coupon, 30%-35% conversion premium
|
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