Charlotte, NC-based Jones Act carrier Horizon Lines announced Monday that it has finalized an agreement with former parent-firm CSX Corporation to reduce the carrier's charter payments on three vessels being leased from CSX.
Under the terms of the deal, the embattled carrier's charter hire expense on the three vessels has been reduced by $3 million per year, retroactive to January 2011, and carrying through the January 2015 expiration of the charter. The agreement, according to Horizon, will represents a total savings of $12 million for the carrier over the remaining life of the charter.
The three chartered vessels, the Horizon Anchorage, Horizon Tacoma, and Horizon Kodiak, serve in the Alaska tradelane and were built in 1987.
"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," Horizon Executive VP and CFO Michael Avara said in a statement. "As our former parent company, CSX remains a valued and very important business partner."
The reduction in charter hire expense of $3 million achieved this year under the agreement was previously included in the carrier's estimated 2011 cost-savings projections of $18 million or greater.
A May 21 default by the carrier under a convertible note indenture was staved off when a federal court agreed last week to reduce Horizon's fine related to a rate and surcharge fixing conspiracy involving maritime cargo handling over a six-year period. The court agreed to reduce the carrier's fine from $45 million to $15 million.