Horizon Lines Inc. announced Tuesday it is selling off its remaining businesses and shutting down ocean cargo services between the U.S. and Puerto Rico, which likely means the end of its operations at JaxPort.
The struggling shipping company agreed to sell its Hawaii trade business to The Pasha Group and to sell the rest of the company to Matson Inc. for just 72 cents a share. Matson will be left with Horizon’s Alaska shipping business.
The total value of the two transactions is about $598 million.
Charlotte, N.C.-based Horizon has been serving Puerto Rico through ports in Jacksonville and Houston. A public relations firm representing Horizon was unable to get answers from the company Tuesday about the Jacksonville operations.
Horizon said in a news release it “has incurred substantial cumulative losses and negative cash flows in recent years” in its Puerto Rican business.
“Unfortunately, a combination of factors, including uncertain prospects for the Puerto Rican economy, losses over recent years and more expected going forward, aging ships that we cannot afford to continue to maintain or replace, and upcoming large capacity additions by two other carriers has led to this difficult but prudent and necessary decision,” Horizon CEO Steve Rubin said in the release.
Rubin was named interim CEO of Horizon in June and made the permanent CEO in September.
“During my short tenure as CEO we have made tough decisions to try to restore profitability in the hopes of continuing the service. In addition, management had explored several other strategic options in an attempt to maintain a presence in Puerto Rico, however none proved to be possible. This decision is a very painful and difficult one for all of us, but it is the only viable course of action for our company given the circumstances,” he said.
Horizon was formed from a shipping company that was owned by Jacksonville-based CSX Corp.
CSX sold the business to private equity firm The Carlyle Group in 2003, and then Carlyle took the company public in 2005.
The company has lost money every year since 2008 and its stock has been trading below $1 for most of 2014. The stock closed at 37.5 cents Tuesday, before Horizon’s late afternoon announcements.
JaxPort CEO Brian Taylor is a former Horizon executive who left as executive vice president and chief operating officer in December 2012.
When Taylor started his tenure at JaxPort in July 2013, he was still receiving payments from Horizon under a separation package. However, the Florida Commission on Ethics ruled there was no conflict of interest in Taylor taking the position at JaxPort.
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