Horizon Lines, a major ocean cargo transportation firm serving Hawaii, shaved $188.4 million of debt from its balance sheet as part of a deal that settled charter obligations on five ships idled after terminating service between the mainland, Guam and China in November.

The North Carolina-based cargo carrier whose market share in Hawaii is second to Matson Navigation Co. announced the successful debt restructuring today.

As part of the deal, holders of $228.4 million of Horizon debt will receive stock in the company equivalent to 83.5 percent of common stock. The other key part of the deal provides Ship Finance International Ltd., which leased the five ships to Horizon, with $40 million in new debt due in 2016 plus rights to 10 percent of Horizon stock.

Horizon had been on the hook to pay Ship Finance $220.8 million over seven years for the lease, or nearly $32 million a year. It also would cost about $3 million a year to keep the five ships idle.

Holders of Horizon stock prior to the debt-to-equity conversion retain a 6.5 percent stake in the company. Total remaining debt is reduced to about $404 million from about $593 million. 

“These transactions successfully close a chapter in the history of Horizon Lines that we have been working diligently to complete for these past many months,” Stephen Fraser, interim president and chief executive officer, said in a statement. “Horizon Lines moves forward today from a stronger financial position that will enable us to better focus on customers in our core Jones Act trades and to invest in the future of our business.”

Horizon had been under pressure to complete the deal after restructuring significant debts last year.

Two weeks ago, the company announced a tentative agreement to convert $228 million of debt to stock, but cautioned that the transaction was contingent on resolving the ship lease obligation.