Zim Integrated Shipping Services Ltd. is not managing to recover and requires a further, albeit small, debt settlement. On Monday, company executives CEO Rafi Danieli and CFO Guy Eldar met with local financial institutions controlling Zim bonds in order to discuss debt rescheduling.
Zim's two previous major settlements occurred in 2009 a rescheduling of a $7 million debt and in 2014 a 50% 'haircut' for a $3.4 million financial debt, including NIS 1.4 billion to bondholders. In contrast, this time the company is asking creditors to postpone the payment of relatively small debt for seven months, without reducing the overall debt or any delay in its overall clearing schedule.
Zim, controlled by Idan Ofer's company Kenon Holdings Ltd. (TASE:KEN: NYSE: KEN-WI) and other financial institutions and ship owners who had been its creditors before the second debt settlement, currently has a gross debt of $1.45 million. In a meeting with bondholders yesterday, the company updated them regarding the growing challenges in the merchant shipping market, which is "In the midst of the crisis, with shipping prices plummeting." Due to these conditions, it requested its creditors to agree to reschedule some of its debts, for a few months, "In order to take preventive measures and improve the cash flow."
The debt, which financial institution bondholders are currently requested to reschedule amounts to $4.5 million. Zim is not interested in changing the primary conditions of its overall debt, which is much greater. As such, a source in Israel's financial institutions said yesterday, "This is a specific request, aimed at helping the company in a challenging period, with no request to cancel debt or change in the final payment. Therefore, I believe that calling this a 'settlement' may be exaggerated." So far, Zim did not set a deadline by which the creditor would have to reach a decision.
Israel's financial institutions, which have owned the bonds since the second settlement, currently control 20% of Zim Integrated Shipping Services Ltd.'s stake. They control two series of bonds a guaranteed series with a fixed clearing schedule of about $1.5 million per quarter which, as stated above, it will request to extend to 7 months, and a non-guaranteed series, to be paid in one installment in 2023, in dependence on the company's future financial situation.
Published by Globes [online], Israel business news - www.globes-online.com - on July 27, 2016
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