Israel Corp. Gets Backing for Zim Rescue

Israeli ocean carrier Zim Integrated Shipping Services said it is close to getting final approval for a financial restructuring.

The financially troubled carrier said it secured agreements and understandings with banks, bondholders, shipyards and shipowners holding more than 95 percent of its debts and obligations.

Under the restructuring plan, Zim will receive more than $500 million in new financing from its banks in 2009-2010 to finance the purchase of ships, repayable over more than 10 years.

This is part of a larger restructuring agreement with Israeli and foreign banks including rescheduling of debt repayments over 10 years and full or partial grace periods of up to three years on principle payments.

Zim parent Israel Corp. will invest more than $450 million in the carrier, including conversion of existing loans, and will also provide a $100 million safety net.

Zim bonds worth around $350 million originally due for repayment in 2012-2015 will be deferred to 2016 with options for a further deferment to 2017-2020.

"This plan stabilizes Zim`s financial position and creates a solid foundation for the company. This will enable Zim to overcome the current shipping crisis and provide a strong return on Israel Corp.`s investment," said Nil Gilad, CEO of Israel Corp.

"We are pleased to have reached agreements with so many parties who expressed their confidence in the company," said Zim CEO Rafi Danieli.

"Many analysts are pointing to signs of an industry recovery, with expectations that most companies will break even in 2010 and return to profitability in 2011. The financial arrangements detailed in the latest transaction report will enable Zim to capitalize on this recovery," Danieli said.

Israel Corp shareholders will vote on the restructuring plan on Nov. 1.

Contact Bruce Barnard at brucebarnard47@hotmail.com.