The U.S. domestic carrier Horizon Lines is being broken up, the company announced on Tuesday, with its Puerto Rico service being shut down and its Alaska and Hawaii service being sold to existing carriers in those markets. The breakup follows a lengthy odyssey in which Horizon went through multiple rounds of private equity ownership and was later ensnared in a U.S. Justice Department antitrust investigation.
Under the terms of the complex transaction, which still requires regulatory approval, Matson Inc., the largest player in the market between the U.S. mainland and Hawaii, will acquire the outstanding shares of Horizon and in doing so take over the Horizon Alaska service. Separately, Horizon announced Tuesday that it will sell its Hawaii operations for $141.5 million to the Pasha Group, an operator of roll-on, roll-off tonnage in the Hawaii market, and will shutter its Puerto Rico service by the end of 2014. Matson will acquire Horizon for $69.2 million, plus the repayment of debt outstanding at closing.
In the Alaska trade, Horizon deploys three diesel-powered Jones Act qualified container ships and operates port terminals in Anchorage, Kodiak and Dutch Harbor. Horizon's Alaska service consists of two weekly sailings from Tacoma to Anchorage and Kodiak, and a weekly sailing to Dutch Harbor. In addition to the three vessels deployed, Horizon has a reserve steam-powered Jones Act container ship for dry-dock relief.
In the Hawaii market, Pasha will acquire four Jones Act container ships that it says will be operated alongside its 10-year-old ro-ro service utilizing the pure car/truck carrier Jean Anne.
"The acquisition of Horizon's Alaska operations is a rare opportunity to substantially grow our Jones Act business," said Matt Cox, president and chief executive of Matson.
The company went through a major restructuring in 2011. Horizon has funded debt totaling $522.9 million at a weighted average interest rate of 12.4 percent. Most of the debt matures in 2016.
Horizon has 13 ships in the domestic Jones Act trades and operates five port terminals in Alaska, Hawaii and Puerto Rico.