Horizon Lines Adopts Shareholder Rights Plan to Protect Net Operating Loss Carryforwards

News Release Horizon Lines, Inc. (Corporate Headquarters) August 31, 2012

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CHARLOTTE,
NC, August 28, 2012 -- Horizon Lines, Inc. (OTCQB: HRZL) today
announced that its Board of Directors has adopted a shareholder rights plan (the
"Rights Plan") designed to preserve the value of its significant net operating
loss carryforwards ("NOLs") and other related tax assets under Section 382 of
the Internal Revenue Code (the "Code"). 
 
The Company's ability to
utilize these tax assets would be substantially limited upon an "ownership
change," which is generally defined in Section 382 of the Code as a more than 50
percentage point increase in stock ownership, during a rolling three-year
testing period, by "5% shareholders" (as defined in Section 382 of the Code).
The Rights Plan was adopted to reduce the likelihood of this occurring by
deterring the acquisition of Company stock, or securities that are exercisable
for or convertible into Company stock, by persons or groups that would create
such "5% shareholders." The Company's estimated NOLs for United States federal
income tax purposes as of December 25, 2011 were approximately $117.4
million.
 
"The Company has a
significant asset in its NOLs and the Board took this prudent step to protect
this asset," said Jeffrey A. Brodsky, Chairman of the Board of Directors.
 
 
Under the Rights Plan, one
right will attach to each share of common stock of Horizon Lines. Pursuant to
the Rights Plan, if any person or group (subject to customary exceptions
specified in the Rights Plan) acquires "beneficial ownership" (as defined in the
Rights Plan) of 4.9% or more of the "outstanding shares" of the Company's common
stock without the Board's approval, significant dilution in the economic
interest and voting power of such person or group would occur. For purposes of
calculating percentage ownership under the Rights Plan, "outstanding shares" of
the Company's common stock will include all of the shares of common stock
actually issued and outstanding, as well as all of the shares of common stock
issuable upon the exercise of all outstanding warrants (whether or not such
warrants are currently exercisable). The Rights Plan also provides that a person
or group will be deemed to "beneficially own" all of the shares of the Company's
common stock that such person or group would have the right to acquire
(including through the acquisition of warrants) if it had been a "U.S. Citizen"
(as defined in the Company's certificate of incorporation). Existing
shareholders who currently beneficially own 4.9% or more of the "outstanding
shares" of common stock will cause this dilutive event to occur only if they
acquire beneficial ownership of additional stock of the Company (including
through the acquisition of warrants) in an amount in excess of 0.5% of the
"outstanding shares" of common stock. In its discretion, the Board may exempt
certain transactions from the provisions of the Rights Plan, including if it
determines that the transaction will not jeopardize the deferred tax assets or
the transaction will otherwise serve the Company's best interests. The Rights
Plan may be terminated by the Board of Directors of Horizon Lines at any time
prior to the rights becoming exercisable.
 
The rights are not
exercisable until a later date and will expire on August 27, 2015, or earlier
upon the date that: (1) the Board determines that the plan is no longer needed
to preserve the deferred tax assets or is no longer in the best interest of the
Company and its stockholders, (2) the Board determines, at the beginning of a
specified period, that no tax benefits may be carried forward, or (3) the rights
are redeemed or exchanged by the Board pursuant to the Rights Plan. The issuance
of the rights is not a taxable event and will not affect the Company's reported
financial condition or results of operations (including earnings per
share).
 
Horizon Lines will file
additional information about the terms and conditions of the Rights Plan with
the Securities and Exchange Commission.
 
In connection with the
adoption of the Rights Plan, Horizon Lines today announced that its Board of
Directors has amended the Company's bylaws to require any person or group who
acquires beneficial ownership of 4.9% or more of the "outstanding shares" of the
Company's common stock, taking into account all of the shares of the Company's
common stock that such person or group would have the right to acquire
(including through the exercise of warrants) if it had been a "U.S. Citizen" (as
defined in the Company's certificate of incorporation), to notify the Company of
its ownership and provide certain additional information. These amendments are
designed to enhance the Company's ability to monitor beneficial ownership levels
under the Rights Plan.
 
About Horizon Lines

 
Horizon Lines, Inc. is one
of the nation's leading domestic ocean shipping companies and the only ocean
cargo carrier serving all three noncontiguous domestic markets of Alaska, Hawaii
and Puerto Rico from the continental United States. The company maintains a
fleet of 15 fully Jones Act qualified vessels and operates five port terminals
in Alaska, Hawaii and Puerto Rico. A trusted partner for many of the nation's
leading retailers, manufacturers and U.S. government agencies, Horizon Lines
provides reliable transportation services that leverage its unique combination
of ocean transportation and inland distribution capabilities to deliver goods
that are vital to the prosperity of the markets it serves. The company is based
in Charlotte, NC, and its stock trades on the over-the-counter market under the
symbol HRZL. 
 
Forward Looking
Statements 
 
The information contained
in this press release should be read in conjunction with our filings made with
the Securities and Exchange Commission. This press release contains
"forward-looking statements" within the meaning of the federal securities laws.
Forward-looking statements are those that do not relate solely to historical
fact. They include, but are not limited to, any statement that may predict,
forecast, indicate or imply future results, performance, achievements or events.
Words such as, but not limited to, "will," "intend," "expect," "would," "could,"
"must," "may," and similar expressions or phrases identify forward-looking
statements. 
 
Factors that may cause
expected results or anticipated events or circumstances discussed in this press
release to not occur or to differ from expected results include: the difficulty
of determining all of the facts relevant to Section 382 of the Code; unreported
buying and selling activity by securityholders; unanticipated interpretations of
the Code and related regulations; and the adoption of the Rights Plan may not
prevent one or more securityholders of the Company from, notwithstanding the
dilution to such securityholder's interests under the Rights Plan, engaging in
buying and selling activity that may have an adverse impact on the Company's tax
attributes.
 
All forward-looking
statements involve risk and uncertainties. In light of these risks and
uncertainties, expected results or other anticipated events or circumstances
discussed in this press release might not occur. The forward-looking statements
included in the press release are made only as of the date they are made and the
Company undertakes no obligation to update any such statements, except as
otherwise required by applicable law. See the section entitled "Risk Factors" in
our Form 10-K filed with the SEC on April 10, 2012, for a more complete
discussion of these risks and uncertainties and for other risks and
uncertainties. Those factors and the other risk factors described therein are
not necessarily all of the important factors that could cause actual results or
developments to differ materially from those expressed in any of our
forward-looking statements. Other unknown or unpredictable factors also could
harm our results. Consequently, there can be no assurance that actual results or
developments anticipated by us will be realized or, even if substantially
realized, that they will have the expected
consequences.</DIV></BODY></HTML>