Business Context and Reporting Period
This Form 8-K, dated June 28, 2012, reports on Matson, Inc. (formerly Alexander & Baldwin Holdings, Inc.), a Hawaii-based company. The filing details the finalization of the company's separation from its former parent, specifically the assumption of debt obligations by the newly named Matson, Inc. effective June 28 and June 29, 2012.
Key Financial Metrics and Debt Structure
- New Revolving Credit Facility: On June 28, 2012, the Company borrowed a total of $230.3 million under a new Credit Agreement with Bank of America, N.A.
- Use of Proceeds (Credit Agreement): $72.0 million was used to repay the Prior Revolving Credit Agreement. $158.3 million was used for the "A&B Capital Contribution" and shared separation expenses.
- Letters of Credit: $7.0 million in letters of credit were deemed issued under the new Credit Agreement.
- Senior Unsecured Notes: On June 29, 2012, the Company issued new senior unsecured Notes totaling $170 million.
- Use of Proceeds (Notes): $158.3 million was used to pay down the revolving borrowing from the Credit Agreement; the remainder was for general corporate purposes.
- Collateral Release: The First Preferred Ship Mortgage (dated May 19, 2005) was released by The Prudential Insurance Company of America.
Material Changes Versus Prior Period
- Debt Assumption: Matson, Inc. assumed all rights, duties, and liabilities of Matson Navigation Company, Inc. under the Credit Agreement and Note Purchase Agreement dated June 4, 2012.
- Termination of Prior Debt: The Prior Revolving Credit Agreement (dated August 5, 2011) was terminated on June 28, 2012, with all outstanding loans repaid in full.
- Corporate Name Change: The Company officially changed its name from "Alexander & Baldwin Holdings, Inc." to "Matson, Inc." effective June 29, 2012.
- Guaranty Structure: Matson Nav. and certain subsidiaries entered into guaranty agreements to secure the Company's obligations under the new Credit Agreement and Note Purchase Agreement.
Management Commentary, Risks, and Unusual Items
- Executive Compensation Changes: The Board approved a salary increase for CEO Matthew J. Cox from $433,000 to $602,000, effective July 2, 2012. His target bonus was increased from 60% to 80% of base salary. The Board also approved reimbursement for housing rental costs in Hawaii.
- Change of Control Agreements: New "double trigger" Executive Change of Control Agreements were adopted for nine executive officers. These provide severance (2x base salary + target bonus) and benefits if employment is terminated without cause or for good reason following a change in control.
- Pro Forma Financials: Unaudited pro forma condensed consolidated financial statements (Exhibit 99.1) exclude the results of real estate development, real estate leasing, and agricultural businesses, reflecting the post-separation entity.
Investor Verification Checklist
- Verify the specific interest rates and maturity dates for the new $170 million senior unsecured Notes and the $230.3 million Credit Agreement by reviewing the referenced June 7, 2012 Form 8-K.
- Confirm the exact terms of the "A&B Capital Contribution" and the allocation of shared separation expenses.
- Review Exhibit 99.1 for unaudited pro forma financial statements to understand the standalone financial position of Matson, Inc. excluding real estate and agricultural segments.
- Assess the impact of the new executive compensation packages on future operating expenses and potential dilution from stock option acceleration clauses.