COURT REDUCES HORIZON LINES' FINE TO $15 MILLION
News Release
Horizon Lines, Inc. (Corporate Headquarters)
April 29, 2011
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align=center><SPAN style="FONT-FAMILY: Arial"><B><I>REDUCED FINE REMOVES
MAY 21<SUP>ST</SUP> DEFAULT POTENTIAL<BR>RELATED TO CONVERTIBLE NOTES AND
IS EXPECTED TO
FACILITATE REFINANCING</I></B></SPAN><SPAN
style="FONT-FAMILY: Arial; FONT-SIZE: 11pt"><B><I>
</I></B></SPAN></P>
<P
style="TEXT-ALIGN: center; FONT-STYLE: normal; FONT-FAMILY: Times New Roman; MARGIN-BOTTOM: 0pt; COLOR: black; FONT-SIZE: 10pt; FONT-WEIGHT: normal"
align=center><SPAN style="FONT-FAMILY: Arial">Company Intends to Proceed
with Puerto Rico Class Action Settlement </SPAN></P>
<P
style="MARGIN-TOP: 0px; MARGIN-BOTTOM: 0px"> </P></TD></TR></TBODY></TABLE>
<TABLE style="MARGIN-BOTTOM: 6px" id=content_LETTER.BLOCK4 border=0
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<TD style="FONT-SIZE: 10pt">
<P
style="TEXT-ALIGN: justify; LINE-HEIGHT: normal; FONT-STYLE: normal; MARGIN-TOP: 0pt; FONT-FAMILY: Times New Roman; MARGIN-BOTTOM: 0pt; COLOR: black; FONT-WEIGHT: normal"><SPAN
style="FONT-FAMILY: Arial"><B>CHARLOTTE, NC</B></SPAN><SPAN
style="FONT-FAMILY: Arial"> (April 28, 2011) - Horizon Lines, Inc. (NYSE:
HRZ) today announced that a federal court has granted a request by the
U.S. Department of Justice to reduce the company's fine related to federal
antitrust violations in the Puerto Rico tradelane from $45 million to $15
million. <SPAN> </SPAN><BR><BR>As a result of the reduced fine,
Horizon Lines is no longer facing the prospect of a May 21, 2011, default
under its convertible note indenture. The company could have been declared
in default by the convertible note holders on any judgment over $15
million that the company was unable to pay, bond, or otherwise discharge
in full within 60 days of the March 22, 2011 judgment.<BR><BR>"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 Michael T. Avara, Executive Vice
President and Chief Financial Officer.<SPAN> </SPAN>"The fine
reduction will preserve our company's financial flexibility, and we are
confident that it will facilitate our efforts to secure new long-term
financing. We remain in constructive discussions as we continue to move
forward with our refinancing efforts."<BR><BR>The reduced fine of $15
million is payable over five years without interest, with $1 million
payable within 30 days of March 24, 2011 (which has been paid), $1 million
on or before the first anniversary, $2 million on the second anniversary,
$3 million on the third anniversary, and $4 million annually on the fourth
and fifth anniversaries. <BR><BR>Stephen H. Fraser, President and
Chief Executive Officer, stated: "While our customers have been
overwhelmingly supportive since we filed the 10-K, our company has faced a
challenging business environment through the first-quarter.<SPAN>
</SPAN>We have been operating under increasingly tight constraints imposed
by certain of our suppliers due to the going-concern audit opinion, which
resulted in part from the note holders' decision to not grant us a waiver.
<SPAN> </SPAN>This, in turn, has reduced our liquidity. The fine
reduction should help give our business partners renewed confidence in our
company's ability to continue supporting our customers and providing
superior service. We look forward to executing a comprehensive refinancing
with the note holders or other partners that will better position Horizon
Lines for long-term success."<BR><BR>Mr. Fraser continued:<SPAN>
</SPAN>"In addition to our loyal customers and suppliers, I want to thank
the dedicated associates of Horizon Lines for their hard work and
unrelenting focus on customer service, safety and operational
excellence.<SPAN> </SPAN>The associates of Horizon Lines are truly
this company's greatest asset, and with their support, I am confident that
we have a bright future ahead."<BR><BR><B>Company Intends to Proceed with
Puerto Rico Class Action Settlement</B><BR><BR> </SPAN><SPAN
style="FONT-FAMILY: Arial">Horizon Lines also announced that the
plaintiffs in the direct purchaser antitrust class action in Puerto Rico
will not object to the company paying the remainder of the $10
million due under the settlement agreement in two equal installments,
with the first due within 30 days after final approval by the court and
the second due within 60 days after final approval by the court. As
a result, the company does not intend to exercise its right to terminate
the agreement. </SPAN><SPAN
style="FONT-FAMILY: Arial"><B><I><BR></I></B></SPAN></P></TD></TR></TBODY></TABLE></DIV></BODY></HTML>
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<BODY>
<DIV>
<TABLE id=content_LETTER.BLOCK5 border=0 cellSpacing=0 cellPadding=5
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<TBODY>
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<TD style="TEXT-ALIGN: center" align=middle>
<P
style="TEXT-ALIGN: center; FONT-STYLE: normal; FONT-FAMILY: Times New Roman; MARGIN-BOTTOM: 0pt; COLOR: black; FONT-SIZE: 12pt; FONT-WEIGHT: normal"
align=center><SPAN style="FONT-FAMILY: Arial"><B><I>REDUCED FINE REMOVES
MAY 21<SUP>ST</SUP> DEFAULT POTENTIAL<BR>RELATED TO CONVERTIBLE NOTES AND
IS EXPECTED TO
FACILITATE REFINANCING</I></B></SPAN><SPAN
style="FONT-FAMILY: Arial; FONT-SIZE: 11pt"><B><I>
</I></B></SPAN></P>
<P
style="TEXT-ALIGN: center; FONT-STYLE: normal; FONT-FAMILY: Times New Roman; MARGIN-BOTTOM: 0pt; COLOR: black; FONT-SIZE: 10pt; FONT-WEIGHT: normal"
align=center><SPAN style="FONT-FAMILY: Arial">Company Intends to Proceed
with Puerto Rico Class Action Settlement </SPAN></P>
<P
style="MARGIN-TOP: 0px; MARGIN-BOTTOM: 0px"> </P></TD></TR></TBODY></TABLE>
<TABLE style="MARGIN-BOTTOM: 6px" id=content_LETTER.BLOCK4 border=0
cellSpacing=0 cellPadding=5 width="100%">
<TBODY>
<TR>
<TD style="FONT-SIZE: 10pt">
<P
style="TEXT-ALIGN: justify; LINE-HEIGHT: normal; FONT-STYLE: normal; MARGIN-TOP: 0pt; FONT-FAMILY: Times New Roman; MARGIN-BOTTOM: 0pt; COLOR: black; FONT-WEIGHT: normal"><SPAN
style="FONT-FAMILY: Arial"><B>CHARLOTTE, NC</B></SPAN><SPAN
style="FONT-FAMILY: Arial"> (April 28, 2011) - Horizon Lines, Inc. (NYSE:
HRZ) today announced that a federal court has granted a request by the
U.S. Department of Justice to reduce the company's fine related to federal
antitrust violations in the Puerto Rico tradelane from $45 million to $15
million. <SPAN> </SPAN><BR><BR>As a result of the reduced fine,
Horizon Lines is no longer facing the prospect of a May 21, 2011, default
under its convertible note indenture. The company could have been declared
in default by the convertible note holders on any judgment over $15
million that the company was unable to pay, bond, or otherwise discharge
in full within 60 days of the March 22, 2011 judgment.<BR><BR>"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 Michael T. Avara, Executive Vice
President and Chief Financial Officer.<SPAN> </SPAN>"The fine
reduction will preserve our company's financial flexibility, and we are
confident that it will facilitate our efforts to secure new long-term
financing. We remain in constructive discussions as we continue to move
forward with our refinancing efforts."<BR><BR>The reduced fine of $15
million is payable over five years without interest, with $1 million
payable within 30 days of March 24, 2011 (which has been paid), $1 million
on or before the first anniversary, $2 million on the second anniversary,
$3 million on the third anniversary, and $4 million annually on the fourth
and fifth anniversaries. <BR><BR>Stephen H. Fraser, President and
Chief Executive Officer, stated: "While our customers have been
overwhelmingly supportive since we filed the 10-K, our company has faced a
challenging business environment through the first-quarter.<SPAN>
</SPAN>We have been operating under increasingly tight constraints imposed
by certain of our suppliers due to the going-concern audit opinion, which
resulted in part from the note holders' decision to not grant us a waiver.
<SPAN> </SPAN>This, in turn, has reduced our liquidity. The fine
reduction should help give our business partners renewed confidence in our
company's ability to continue supporting our customers and providing
superior service. We look forward to executing a comprehensive refinancing
with the note holders or other partners that will better position Horizon
Lines for long-term success."<BR><BR>Mr. Fraser continued:<SPAN>
</SPAN>"In addition to our loyal customers and suppliers, I want to thank
the dedicated associates of Horizon Lines for their hard work and
unrelenting focus on customer service, safety and operational
excellence.<SPAN> </SPAN>The associates of Horizon Lines are truly
this company's greatest asset, and with their support, I am confident that
we have a bright future ahead."<BR><BR><B>Company Intends to Proceed with
Puerto Rico Class Action Settlement</B><BR><BR> </SPAN><SPAN
style="FONT-FAMILY: Arial">Horizon Lines also announced that the
plaintiffs in the direct purchaser antitrust class action in Puerto Rico
will not object to the company paying the remainder of the $10
million due under the settlement agreement in two equal installments,
with the first due within 30 days after final approval by the court and
the second due within 60 days after final approval by the court. As
a result, the company does not intend to exercise its right to terminate
the agreement. </SPAN><SPAN
style="FONT-FAMILY: Arial"><B><I><BR></I></B></SPAN></P></TD></TR></TBODY></TABLE></DIV></BODY></HTML>