Horizon saved, Feds cut price-fixing fine from US$45 million to $15 million

TROUBLED Horizon Lines no longer faces imminent bankruptcy after the company announced that the Federal Court had granted prosecutors` plea that the price-fixing fine it faced be reduced from US$45 million to $15 million.

The Charlotte, North Carolina, company was expected to be in default by bond holders on any judgment over $15 million that the company was unable to pay, bond, or otherwise discharge in full within 60 days of the March 22 judgment, which was generally regarded as the end of the company without re-financing.


Said Horizon chief financial officer Michael Aver: "We are greatly appreciative of this action by the Department of Justice. The fine reduction will preserve our company`s financial flexibility, and we are confident that it will facilitate our efforts to secure new long-term financing. We remain in constructive discussions as we continue to move forward with our refinancing efforts."


The reduced fine of $15 million is payable over five years without interest, with $1 million payable within 30 days of March 24, (which has been paid), $1 million on or before the first anniversary, $2 million on the second anniversary, $3 million on the third anniversary, and $4 million annually on the fourth and fifth anniversaries.


Said Horizon president Stephen Fraser: "While our customers have been overwhelmingly supportive since we filed the 10-K, our company has faced a challenging business environment through the first-quarter. We have been operating under increasingly tight constraints imposed by certain of our suppliers due to the going-concern audit opinion, which resulted in part from the note holders` decision to not grant us a waiver. We look forward to executing a comprehensive refinancing with the note holders or other partners that will better position Horizon Lines for long-term success."


Horizon also said plaintiffs in a class action suit against it will not object to the company paying the remainder of the $10 million due under the settlement agreement in two equal instalments with the first due within 30 days after final approval by the court and the second due within 60 days after final approval by the court. As a result, the company does not intend to exercise its right to terminate the agreement.