Horizon Lines Inc (OTCMKTS:HRZL) disclosed that it struck an in principle agreement with the concerned plaintiffs to settle a consolidated class action suit that has been pending before the Delaware Court of Chancery. The settlement would allow the company enough room to not only settle the pending case but also its dismissal from the court.
The agreement should also enable Horizon Lines Inc (OTCMKTS:HRZL) to clear the hurdle to proceed with the planned merger with the subsidiary of Matson Inc (NYSE:MATX), Matson Navigation, Inc. Now, the agreement needs the approval from the Delaware Court to take it forward.
Agrees To Amend
As part of the agreement struck with the plaintiffs, the company was ready to make changes in its agreement with Matson Navigation that was disclosed on November 11 last year. Towards this, the company has agreed to provide some supplemental disclosures to its shareholders by way of an appendage to the company’s proxy statement.
Horizon Lines Inc (OTCMKTS:HRZL) disclosed that the deal with the plaintiffs centered on the slashing of termination fee that might be payable to Matson Navigation in case the deal fails. As per the deal, the termination fee should be reduced to $9.5 million from the earlier agreement of approximately $17.15 million.
The company stated that the deal with the plaintiffs would not impact the amount of the merger consideration to be paid by Matson Navigation to the shareholders of Horizon Lines. The agreement would also not impact the schedule of the company’s special meeting to be held on February 25 to consider the merger proposal. The company would seek shareholders’ vote for the merger.
Horizon Lines Inc (OTCMKTS:HRZL) clarified that the company and the board felt that claims made by the plaintiffs were not having any merit. However, the company struck a deal with the plaintiffs since it would remove any risks associated with the burden of litigation costs. The company also clarified that in case the Court fails to approve the settlement, Horizon would contest the claims vigorously.