Jul.1--Israel Corp. shareholders approved a radical financial restructuring of Zim Integrated Shipping Services over the weekend, paving the way for the group’s ocean carrier to buy or lease new ships and form strategic partnerships with other container lines.
The debt-for-equity deal is conditional on Israel Corp. reaching agreement with the Israeli government to modify the terms of the state’s “Golden Share” to allow the transfer of shares in the “new” carrier.
“We are confident an agreement will be reached with the government,” said Rafi Danieli, ZIm’s President and CEO.
The biggest debt restructuring in Israeli history calls for some 140 creditors, including charter shipowners, to write off $1.4 billion of Zim’s net debt in exchange for a 68 percent stake in the carrier.
Israel Corp., whose 99.7 percent stake is being cut to 32 percent, will inject $200 million cash into the carrier, provide a $50 million credit line and forgive $238 million in loans that were part of a $1 billion support program in 2008-12.
“The shareholders’ approval indicates an unequivocal expression of confidence in Zim,” Danieli said. “The company is now on the verge of a new era.”
Zim wants to remove the state’s veto over the sale or transfer of more than 24 percent of the carrier’s shares. It also wants to delete a clause requiring it to maintain at least 11 ships to serve Israel’s interests during national emergencies.
The Haifa District Court said it would set the terms of the agreement if the two sides could not strike a deal by June 29.
Following the restructuring charter shipowners, mainly Greek and German, will own 19 percent of Zim in return for canceling $363 million of lease payments.
Zim’s first quarter net loss shrunk to $62 million from $112 million the previous year, and the carrier’s operating loss fell to $8 million from $47 million.
Zim is the world’s 18th largest carrier, operating a fleet of 84 owned and chartered vessels with a capacity of 3466,273 20-foot-equivalent units (TEUs), for a 1.9 percent market share, according to industry analyst Alphaliner.