Kodiak Daily Mirror - Horizon reworks vessel payments
  
Horizon reworks vessel payments
by Wes Hanna
May 03, 2011 | 1127 views | 0 0 comments | 5 5 recommendations | email to a friend | print
Horizon Lines announced Monday the company finalized an agreement with its one-time parent company, CSX Corporation, to reduce by $3 million annually the payments to charter three cargo vessels that regularly visit Kodiak and serve the Alaska trade lane.

The move will save the company $12 million through the beginning of 2015. The three charter vessels are the Horizon Kodiak, the Horizon Anchorage and the Horizon Tacoma.

“It a good thing for Horizon Lines operations,” Kodiak terminal operations manager Rick Kniaziowski said of the recent news.

Horizon Lines was placed in a difficult financial position in February when the company agreed to plead guilty and pay a fine of $45 million in a federal antitrust investigation into price fixing on routes between the United States and Puerto Rico from 2002 until 2008.

Five former Horizon Lines executives were charged in October 2008 and sentenced to serve prison time as a result of the investigation, according to the U.S. Department of Justice.

Under the resulting $45 million fine, Horizon Lines faced the prospect of a default under its convertible note indenture by May 21. The note holders could have declared the default on any judgment of more than $15 million that the company could not pay within 60 days, Horizon Lines said in a press release.

Instead, last week the company announced another piece of good financial news, when a federal court granted the request of the Department of Justice to reduce the company’s fine to $15 million, payable over the next five years.

Both the federal fine reduction and the reduced payments on the vessels working in Alaska were greeted by the company as steps forward as it works to refinance its debt.

“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,” chief financial officer and executive vice president of Horizon Lines Michael T. Avara said in a statement. “We remain in constructive discussions as we continue to move forward with our refinancing efforts.”

Mirror writer Wes Hanna can be reached via email at whanna@kodiakdailymirror.com.
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