Israel Corp. is set to lose control over Zim Integrated Shipping Services after creditors agreed to restructure the financially troubled Israeli ocean carrier’s debt.
The debt-for-equity swap will write off half of Zim’s $2.8 billion debt and give its creditors a 66 percent stake in the restructured carrier, according to Israeli press reports.
Israel Corp., which currently owns 99.7 percent of Zim, will inject $200 million into the carrier to acquire a 33 percent stake.
Zim declined to comment on the reports. “As long as there is no official statement to the stock market we legally cannot say anything,” a spokesman for the carrier told the JOC.
Israel Corp., Israel’s largest holding company, has pumped $800 million into Zim since it hit financial difficulties in a depressed container shipping market in 2007 and came close to bankruptcy two years later.
Banks, mainly foreign, account for just over a half of Zim’s debts, with the remainder owed to charter ship-owners and bondholders. It carries a separate fully secured debt of $390 million to shipyards.
The protracted debt restructuring negotiations have been flanked by deep cost cuts achieved through reducing the charter ship fleet, slimming the service network, buying cargo space from rival carriers, canceling shipyard orders and selling non-core operations.
Zim booked a net loss of $44 million in the third quarter of 2013, down from $97 million a year earlier, but it swung to an operating profit of $17 million from a $29 million loss in the same period in 2012 even as lower freight rates shrunk revenue to $900 million from $976 million.
Zim is the world’s 18th largest carrier, with a fleet of 86 owned and chartered ships with a capacity of 331,352 TEUs and a 1.9 percent market share, according to industry analyst Alphaliner.
Contact Bruce Barnard at email@example.com.