Zim Integrated Shipping Services has taken exception to a credit downgrade by the Israeli affiliate of Standard & Poor’s, which forecast the shipping line’s negative cash flow will continue this year.
S&P Maalot said the downgrade of Zim’s bond rating from “BBB minus” to “BB minus,” below investment grade, reflects an “expectation that the company will continue to report a negative cash flow from ongoing operations in the coming quarters and erode its cash reserves.”
Zim reported a $66 million third quarter loss, compared with a $37 million profit a year earlier, and lost $397 million in 2011. The company has received a series of cash infusions from the carrier’s majority owner, Israel Corp.
Chief Financial Officer Allon Raveh said in an e-mailed statement that S&P’s methodology and justification for the downgrade “do not take into account a series of resources from sale of non-core assets and refinancing transactions which are an integral part of the company’s business plan for the next couple of years.
“It should be noted that the said business plan and the resources it contains have been approved and supported by all relevant banks and institutions, and on this basis Zim’s financial convenants have been amended for the years 2012-2013, according to plan,” Raveh said.