Horizon reduces debt by cutting charters

This has been achieved in part though by terminating charter contracts for five idle vessels with Ship Finance International Ltd (SFL) related to its discontinued trans-Pacific service.

Horizon state that the move will save US$32m annually through 2018, $4.8m in 2019, and associated vessel lay-up costs of $3m per year.

In a statement on SFL’s website, the company state that it will receive $40m in compensation and a 10% stake in Horizon Line’s common stock in return for the termination.

The 2,824 teu vessels were built in Korea and were originally chartered to Horizon for five years – they will now be employed in the time-charter market instead.

CEO of Ship Finance Management AS, Ole B. Hjertaker, commented: “The redelivery of the five vessels to Ship Finance will enable Horizon Lines to focus entirely on its core domestic U.S Jones Act container market, and Horizon Lines should be well positioned to deliver positive results going forward.”

Ship Finance will become a large stakeholder in the restructured Horizon Lines and expects to benefit from both the interest on the notes as well as the value of securities received.