Horizon Lines shareholders approved a 1-for-25 reverse stock split that follows the company’s $652.8 million recapitalization announced in October.
The reverse stock split by Horizon, the largest U.S. domestic ocean carrier, reduces the company’s shares of common stock outstanding to 2.3 million from 56.7 million.
“The reverse stock split is a strategically important step that will help the company meet minimum stock price listing standards that are required by the national stock exchanges,” said Horizon President and CEO Stephen H. Fraser.
Horizon’s stock has been trading over-the-counter since its trading suspension in October by the New York Stock Exchange. Horizon is appealing the NYSE’s action.
“The reverse split, when combined with our focus on executing the planned deleveraging of our existing indebtedness and successful execution of our business plan, should help Horizon attract quality investors and analysts over time,” Fraser said in a statement.
Horizon stockholders also voted to amend the company’s incorporation certificate to authorize the issue of warrants in lieu of cash or redemption noted in consideration for “excess shares” to holders who cannot establish U.S. citizenship to meet Jones Act requirements.
Stockholders also approved a restated certificate of incorporation that combines into one document all provisions of the prior certificate and newly approved amendments and eliminates inapplicable provisions.
Additionally, stockholders approved the company’s proposals to increase the authorized number or shares to 2.5 billion from 100 million. The share increase proposal would have become effective only if stockholders had not approved the reverse split.
The reverse split follows Horizon’s previously announced recapitalization plan, which staved off the threat of bond defaults in the wake of the company’s guilty plea last March to a felony antitrust charge for price-fixing in the Puerto Rico trade between 2002 and 2008.
The recapitalization converted a large portion of debt to equity and allows Horizon to convert additional portions of its 6 percent convertible bonds into common stock or warrants next year, provided the stock price reaches certain levels.