Almost five months after the signing of a memorandum of understanding on the huge debt settlement in Zim Integrated Shipping Services Ltd., amounting to $3 billion, and the second in its history, and after negotiations in various places around the world, the shipping company of the Israel Corporation (TASE: ILCO) group has announced a final agreement with its creditors. Israel Corporation has accordingly announced a special shareholders' meeting to be held on June 23 to approve the agreement.
Only a few days ago, Israel Corporation gave Zim's creditors an ultimatum that unless the arrangement was closed by July 1, it would cancel its participation in it, thereby in effect undermining the entire arrangement.
The Israel Corporation board has accordingly approved an injection of $200 million into Zim, along with a dilution of its stake in the shipping company to 32%. Israel Corporation will also forgive $238 million of debt owed to it by Zim, and will make available a credit line of $50 million for two years and additional guarantees amounting to $10 million.
At the same time, the private companies controlled by the controlling shareholder in Israel Corporation Idan Ofer and his partner Udi Angel will forgive a debt of $300 million that Zim owes them for a reduction in leasing fees for ships and for a safety net of $50 million that Ofer made available to Zim in 2013. Zim says that these moves will make its shareholders equity positive and its company value $600-800 million.
Published by Globes [online], Israel business news - www.globes-online.com - on May 20, 2014
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