The strong market position enjoyed by Horizon Lines Holding Corp. was a critical factor in Castle Harlan's decision to acquire the shipping line.

Horizon - originally Sea-Land, which pioneered the container-shipping industry, and later CSX - is the leading Jones Act shipping line between mainland U.S. ports and Alaska, Puerto Rico, Hawaii and Guam. As such, it benefits from limited competition and relatively stable demand. Reinforcing this stability is the diversity of Horizon's business - carrying a wide range of consumer staples and other goods for a variety of long-standing customers to these geographically dispersed and gradually growing markets.

Enhancing the potential of Horizon's market leadership was the development of a new information technology system that helps Horizon carefully keep track of all of its customers' freight.

Marcel Fournier, Erica A.Tsai and Thomas M. Hickey

This positive factor, coupled with the operational excellence and bottom-line orientation of the line's management team, suggested that Horizon's steady growth could be accelerated in various ways. As the only line serving all three major Jones Act markets, Horizon can attract large, national customers by providing innovative services and efficiencies that its broad infrastructure makes possible. It offers logistics expertise to facilitate delivery planning, and door-to-door and port-to-port shipping. Its cost-saving computerized information system lets customers book and track orders and handles documentation and invoicing as well. The strong on-time performance of Horizon's well-maintained fleet, the largest serving these ports, is critical for some customers and is also important for meeting rising service expectations. Castle Harlan is using its financial skills and industry knowledge to reduce operating costs and to promote Horizon's capabilities.

In July 2004, Castle Harlan Partners IV ("CHPIV"), acquired Horizon for $650 million. The company had increased its revenues and earnings by about 5 per cent a year over the nine years before its acquisition by Castle Harlan. Castle Harlan retained significant value in Horizon shares after recouping its initial $158 million equity investment through a bond sale and subsequent public offering.