Horizon Lines Inc. (HRZ) said a federal court has 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 is no longer at risk of a May 21 default.
Shares jumped 8.4%, to $2.32 in after-hours trading. As of the close, the stock had fallen 51% this year.
The container-shipping and intermodal-transportation company said the court agreed to cut its fine from $45 million to $15 million, as requested by the U.S. Department of Justice. The reduction means the company can avoid a default under its convertible note indenture–the company could have been in default after 60 days of the March 22 judgment on any judgment over $15 million that the company was unable to pay or otherwise discharge.
“We are greatly appreciative of this action by the Department of Justice, which also allows the company to proceed with settlement of the class action litigation in Puerto Rico,” said Chief Financial Officer Michael T. Avara, who noted that the reduction “will preserve our company’s financial flexibility.”
Horizon was accused of fixing rates between Puerto Rico and the U.S. from as early as May 2002 until at least April 2008, and it agreed to plead guilty to a felony charge in March.
The reduced fine, like the previous one, will be payable over five years without interest, with $1 million–which has been paid–due on or before the first anniversary.
-By Nathan Becker, Dow Jones Newswires