Horizon Lines has delayed for one week its target date for completing a $655 million refinancing that would stave off bankruptcy by the largest U.S. domestic ocean carrier.
The company announced a second extension in its deadline for bondholders to agree to swap $330 million in convertible notes for new debt and equity. The original Sept. 23 deadline had been pushed back until Tuesday and now is set for next Monday.
The exchange, which would leave bondholders with most of the company’s stock, is the keystone of Horizon’s refinancing plan. Horizon said this month that if the deal didn’t go through, it probably would be forced into bankruptcy.
Horizon said it now intends to complete the debt exchange and close the entire refinancing by Oct. 6. It previously had hoped to close on the refinancing by the end of September.
Horizon said holders of 99.3 percent of the notes had agreed to the exchange by the original Sept. 23 deadline.
The company said the latest extension was needed to provide time “to address certain important administrative matters” including verification of remaining bondholders’ declarations of U.S. citizenship. The Jones Act requires U.S. citizen ownership of domestic carriers such as Horizon.
In the exchange offer, Horizon also is asking holders of the convertible notes “to remove substantially all of the restrictive covenants and certain events of default” from the indenture covering the notes.
Horizon has been struggling to straighten its finances since pleading guilty last March to price-fixing in the Puerto Rico trade and agreeing to a $45 million fine, later reduced to $15 million, that threatened to put the company in default of bond covenants.
Contact Joseph Bonney at firstname.lastname@example.org.