Container shipping operator Horizon Lines Inc. will plead guilty to a federal price-fixing charge and pay a $45 million criminal fine under an agreement with the Justice Department's antitrust division announced Thursday.
The government said Horizon Lines took part in a conspiracy to fix rates and surcharges for water transport of freight between the continental U.S. and Puerto Rico. The violations began as early as May 2002 and continued to at least April 2008, the Justice Department said in a news release. The one-count felony charge was filed in federal court in Puerto Rico. The plea agreement is subject to court approval.
Horizon Lines, based in Charlotte, N.C., moves heavy equipment, medicines, consumer goods and other cargo on scheduled ocean vessels.
The company said in a separate news release that it will pay the fine over five years. As a result, Horizon Lines said it will take a $30 million charge against earnings for the fiscal year ended Dec. 26, reflecting the present value of the $45 million in installment payments.
Horizon Lines also said it is suspending its quarterly dividend, effective immediately.
The company also announced a shakeup of top management. It named Alex Mandl as chairman and Stephen Fraser as interim president and chief executive officer. They replace Chairman, President and CEO Charles Raymond, who is retiring, Horizon Lines said.
In addition, Brian Taylor was named executive vice president and chief operating officer, succeeding John Keenan, who is taking a leave of absence. Taylor will take over the chief operating officer duties in addition to his current position as chief commercial officer. The changes take effect March 11.
In addition, Horizon Lines said it is talks with some of its lenders to waive a judgment default that will result from its plea agreement and to suspend its debts as it seeks new long-term financing.
Horizon Lines shares fell 51 cents, or 10 percent, to $4.75.