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    Horizon Offshore issues update on financial situation

    News // February 20, 2004
    Horizon Offshore has announced that due to its inability to collect any of its outstanding claims against Pemex or obtain financing on acceptable terms with an institutional lender prior to January 31, 2004 it has reached agreement with the lenders on two of its existing revolving credit facilities to amend its loan agreements.

    These amendments remove a condition that would have reduced its borrowing capacity under these agreements from an aggregate of US$50 million to US$20 million on January 31, 2004.

    As of January 28th, US$50 million was outstanding under these revolving credit facilities. Each of these facilities matures on April 3rd, 2004.

    Horizon is currently pursuing additional debt and equity sources of financing to replace these facilities prior to their maturity and to reach long-term agreements with the lenders on all of its credit facilities. If Horizon does not obtain long term financing on acceptable terms and does not collect on its Pemex claims prior to April 3rd, 2004, it will need to obtain another extension from the lenders on the revolving credit facilities mentioned above.

    Horizon also reported that it and its consultants continue to negotiate with and use their best efforts to collect its outstanding claims against Pemex, but the ultimate amount and timing of payment of its claims is uncertain at this time.

    The possibility exists that Pemex could pay a portion of the claims and require Horizon to submit the remainder of its claims to arbitration, or, if agreement cannot be reached with Pemex, Horizon may have to submit all of its claims to arbitration. Because of the uncertainty associated with the timing of any payments, the company is currently evaluating the amount to be reserved for accounting purposes for the Pemex receivable and reflected in its fourth quarter 2003 results.

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