Horizon Lines, whose customers include Costco Wholesale, Johnson & Johnson, Lowe's Companies, Safeway and Wal-Mart Stores, generates most of its revenue by having specified rates and volumes with customers.
The economic crisis led to most customers cutting shipments, hurting sales at Horizon Lines.
The company, which has borrowings of $576.6 million, said it will breach agreements related to its notes and also default on the revised covenants under its credit facility.
Horizon Lines, whose operating history goes back to 1956, said it could be forced to seek "reorganization under federal bankruptcy laws," as there was no assurance that its discussions with lenders for debt restructuring will be successful.
The company said it carries over a third of marine container shipments from continental United States to Alaska, Puerto Rico, Hawaii, Guam, the U.S. Virgin Islands and Micronesia.
"Uncertainties regarding our ability to remain in compliance with certain debt covenants under our senior credit facility throughout 2011 and our ability to cure a potential acceleration under our notes raise substantial doubt about our ability to continue as a going concern," Horizon Lines said. (Reuters)
