Israel Corp. mulls relinquishing control of Zim

Zim is offering banks and bondholders a 50% haircut by converting nearly half its $3 billion debt into 100% of its shares.

Idan Ofer may be one of the few Israeli tycoons left able to put in the kind of money that would support the companies he owns, even if they do have huge debts, but he has no intention of helping out Zim Integrated Shipping Services Ltd. in this way.

The top executives at Israel Corporation (TASE: ILCO) led by CEO Nir Gilad have been proposing at recent meetings relinquishing control of the shipping company as part of a debt settlement.

Accordingly, Zim is proposing that banks and bondholders convert $1.4 billion in debt out of the $3 billion that the shipping company owes, into 100% of the company's shares, or in other words, a 50% haircut. As part of this settlement, Israel Corp. would consider a large capital injection into the shipping company in exchange for 20% of the shares.

In its 2012 financial report Israel Corp. expressed readiness to relinquish its shares in Zim - which has zero value. "Following agreements with the financing banks, the company is supporting in principle the full transfer of Zim's shares to a body that would hold them in trust for creditors."

Four years have passed since the shipping company's first debt settlement, and today Zim finds itself back at square one, due to the continuing worsening of the shipping sector.

Published by Globes [online], Israel business news - - on June 20, 2013

© Copyright of Globes Publisher Itonut (1983) Ltd. 2013

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