Zim Integrated Shipping Services Ltd., owned by Israel Corporation (TASE: ILCO), is close to signing a debt settlement with its creditors, after months of intensive negotiations, which would see it lose control of the shipping company. The settlement reportedly includes a 50% write-off on the debt.
As part of the settlement, Israel Corp., controlled by Idan Ofer, will forego debt and inject an additional $200 million in Zim, in exchange for keeping 33% of the company. Zim's creditors will receive 66% of its shares. Zim will issue a new bond which will supersede current bonds.
Zim has been in crisis since 2008, due to the ongoing slump in the global shipping industry. Its debt totals $3 billion, including $775 million in unsecured debt of which $376 million is owed to Israeli shareholders, $1.8 billion in party secured debt to foreign banks, and $390 million in fully secured debt to shipyards.
This will be Zim's second debt settlement, following a settlement four years ago. Then, as now, the company's creditors had to decide whether to allow the company to sink or be rescued through a settlement that included a partial write-off of its debt and reschedule the remainder at a higher interest rate, in the hope that the shipping industry will recover. In the 2009 settlement, Israel Corp. injected $550 million into Zim, following a $250 million injection the previous year.
Published by Globes [online], Israel business news - www.globes-online.com - on January 15, 2014
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