Horizon Lines
going public?

Hawaii's second-largest ocean
freight carrier may be preparing for
an IPO, an industry publication says

Hawaii shipper Horizon Lines, which has had three owners in the past two years, may be going public.

A report in a Stamford, Conn.-based marine publication, Marine Money, is reporting that private-equity firm Castle Harlan is interviewing prospective underwriters for an upcoming initial public offering.

Horizon Lines, the second-largest ocean freight carrier in Hawaii behind Matson Navigation Co., was purchased by Castle Harlan in May 2004 for $650 million from the Carlyle Group, the Washington, D.C.-based investment firm that is in the final stages of completing its acquisition of local telephone provider Verizon Hawaii.

The Carlyle Group bought Horizon, formerly known as CSX Lines, from CSX Corp. for $300 million in 2003.

Marcel Fournier, managing director of New York-based Castle Harlan, didn't return a phone call.

Brian Taylor, vice president of Horizon Lines for Hawaii and Guam, was unavailable for comment.

Marine Money said Castle Harlan took about $100 million out of the company through a zero-coupon bond sale last month and used the proceeds to pay off a $50 million loan it had taken out to finance part of the Horizon purchase and to pay for a $51 million distribution to shareholders. Castle Harlan is preparing to take more cash out of the company through the IPO while keeping a big stake in the business, Marine Money said.

Horizon Lines, which entered the Hawaii-West Coast trade in 1987 as Sea-Land Service Inc., serves Hawaii, Alaska, Guam and Puerto Rico with a fleet that is all propelled by steam turbines.

TradeWinds, an Oslo, Norway-based publication, said the last available figures in 2003 showed that Horizon's revenues rose 9.6 percent to $830 million from the previous year. The report said that even though Horizon's oldest ships are pushing 40 years old, the company plans to keep restoring the ships at Far East shipyards rather than building new ships.

Castle Harlan has 32 companies in its portfolio, including Adobe Air and Morton's Restaurant Group.