"This major project follows on the heels of our successful performance of major projects in Israel and Mexico in 2004. We are pleased that WAPCo has shown its confidence in our ability and intend to reward that confidence with the same type of performance we have shown on our recent projects,'' said George Reuter, Chief Operating Officer of Horizon.
The Company also announced that it has selected and is working with a prospective lender to refinance through a term loan and revolving credit facility all of the debt outstanding under its revolving credit facilities with Southwest Bank of Texas, N.A. (Southwest Bank) maturing on January 21, 2005 and revolving credit facility and term loan with The CIT Group/Equipment Financing, Inc. (CIT Group) maturing later in 2005. The Company is working with its senior lenders and its subordinated note holders to obtain all required consents and support to allow the proposed refinancing to proceed. Assuming that the maturing debt is refinanced, the Company then intends to proceed in the first quarter of 2005 with increasing its equity through the recapitalization contemplated in the recapitalization letter agreement that it entered into with its subordinated note holders in November 2004.
The Company also announced that it will record an estimated pre-tax charge of $2.2 million to be paid in cash and non-cash charge of $18.3 million that will be recognized in the fourth quarter of 2004 under generally accepted accounting principles. The aggregate amount of the charge is based on estimates that may change as additional information becomes available. The charges to be paid in cash primarily relate to an estimated $2 million severance charge resulting from a reduction in the Company's workforce and an estimated $0.2 million charge resulting from the expenses of moving equipment in connection with consolidating the Company's Gulf of Mexico marine facilities. The non-cash charges primarily relate to an estimated $6.7 million non-cash impairment charge resulting from the consolidation of the Company's Gulf of Mexico marine facilities; an estimated $6.1 million non-cash impairment charge to its existing inventory of platform structures; an estimated net charge of $3.4 million non-cash charge resulting from the Company's anticipated settlement of its litigation with Iroquois Gas Transmission LP for less than the amount that the Company currently has recorded on its balance sheet; an estimated $1.1 million non-cash impairment of vessel charge resulting from the removal from service of the Cajun Horizon, which has been inactive since 1999; and an estimated $1 million non-cash goodwill impairment charge resulting from the Company's evaluation of the carrying value of the goodwill of a Mexican subsidiary of the Company.
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