The chances that the second debt settlement at shipping company Zim Integrated Shipping Services Ltd. will be implemented in its present format look slim. The company, controlled by Israel Corporation (TASE: ILCO), has warned that without the settlement it is liable to go into liquidation. Zim employs some 4,000 people.
Yesterday, the state dropped a bombshell when it told the Haifa District Court that it was opposed to relinquishing its "golden share" in Zim (one of Israel Corporation's conditions for implementing the debt settlement). Before that, consultants Entropy advised the institutions invested in Zim to vote against the settlement at this Friday's shareholders meeting.
The state said in its response to the request to forego the golden share in Zim that such a step would represent "very material harm to vital national interests". The response accuses Israel Corporation of trying to change the terms of the golden share for reasons unconnected to the proposed debt settlement, and of circumventing the legal procedure for doing so, which involves a government decision.
On the possibility of Zim becoming insolvent, the state's response says: "the importance of the state's share does not diminish in the event of insolvency, and it was devised in order to safeguard the state's vital interests even in such a situation."
The main term of the state's share in Zim that the company seeks to cancel is the restriction on the transferability of its shares. The state's agreement must be obtained for any deal for the sale of 24% or more of the shares in Zim. Zim also seeks to cancel the obligation to maintain a fleet of at least eleven vessels in its ownership. The state expresses adamant opposition to both requests.
Published by Globes [online], Israel business news - www.globes-online.com - on June 24, 2014
© Copyright of Globes Publisher Itonut (1983) Ltd. 2013