Entropy Consultants Ltd. issued a recommendation yesterday that all financial institutions holding Israel Corporation (TASE: ILCO) shares should vote against the debt settlement for subsidiary Zim Integrated Shipping Services Ltd. in Fridays’ shareholders’ vote.
Entropy’s recommendation is based on Prof. Asher Blass’s analysis, which says that the bottom line is that funneling $200 million from Israel Corp. to Zim in exchange for 32% of its shares is not worthwhile for the minority shareholders, as, according to Blass’s calculations, these shares will only be worth $67 million. In other words, Blass believes that Israel Corp. is likely to overpay on the debt settlement, and to receive too little in return.
Blass said, “Only with optimistic assumptions, which, as previously stated, are not consistent with the data, can we conclude that the current debt settlement is anywhere near financially worthwhile for the minority shareholders.”
International consultancies ISS and Glass Lewis, on the other hand, advised foreign Israel Corp. shareholders to support the debt settlement. However, these investors hold a total of only a few percent of Israel Corp. shares.
Zim CEO: This is a critical week facing Zim
“We are in a last critical week, and it seems to me that not everyone understands how serious it is,” Zim CEO Rafi Danieli told “Globes” yesterday. And, indeed, how the wheel turns: Only a few weeks ago, Zim and its controlling shareholder, Idan Ofer’s Israel Corp., were optimistic that the shipping company’s second debt settlement was advancing safely to the final stretch. And now, Zim faces a week in which it will only become clear at its end whether it is facing a second debt settlement, or liquidation. And this comes after Minister of Finance Yair Lapid has served a second blow in less than a year to the company: after he removed the possibility of selling Israel Chemicals Ltd. (TASE: ICL) to Canadian Potash in April, he is now opposing the government’s forfeiture of its golden share in Zim.
“It is not possible to continue to drag the debt settlement on and on; it must be ended. We have not made payments to our creditors for a year and half already. At some point, the creditors will lose their patience. To bring more than 100 international creditors over the course of a year and a half process to agree to a debt settlement is, in and of itself, a very big accomplishment. If there is no closing at the end of June, any creditor can pull the carpet out from under the debt settlement,” added Danieli.
Tomorrow, the Haifa District Court will discuss the matter of the Zim golden share in a hearing initiated by Israel Corp., in order to clarify the government’s position on the matter.
Published by Globes [online], Israel business news - www.globes-online.com - on June 23, 2014
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