Horizon Lines Inc. (HRZ) received a break on some of its expenses from former parent company CSX Corp. (CSX), which agreed to reduce Horizon’s charter payments on three leased vessels by a combined $12 million over several years.
Shares were up 3.4% at $1.83 in recent premarket trading and had plunged in March after the company disclosed it likely wouldn’t be in compliance with its debt covenants this year, raising substantial doubt about its ability to continue as a going concern. The stock is down 60% this year.
Under the pact unveiled Monday, the struggling container shipping and intermodal transportation company’s charter hire expense will be cut by $3 million a year retroactive to January of this year though January 2015 when the charter expires. The expected savings were included in prior cost savings projections for this year.
“We greatly appreciate the willingness of CSX to provide meaningful financial assistance as we work to refinance our debt and position Horizon Lines for long-term success,” Chief Financial Officer Michael T. Avara said.
Horizon Lines Inc. (HRZ) last week said a federal court agreed to reduce the company’s fine related to a conspiracy to fix rates and surcharges for marine freight transportation over a six-year period, meaning the company was no longer at risk of a May 21 default.
The company said the court agreed to cut its fine from $45 million to $15 million, which allowed the company to avoid a default under its convertible note indenture.
-By Tess Stynes, Dow Jones Newswires