Zim Integrated Shipping Services has been thrown a lifeline by its creditors, who have agreed to write off ILS5.25 billion (US$1.5 billion) of outstanding debt in exchange for 66 per cent of the Israeli shipping line's shares.
This will allow Zim to focus on rebuilding its core liner services and means it will continue to be ranked among the world's top 20 ocean liners, after it emerges from restructuring. It is presently ranked 18th with 1.9 per cent market share.
Details of the debt deal are yet to be announced. Zim's financial debt stood at $2.49 billion at the end of September 2013 and it has been operating with negative equity since the fourth quarter of 2012.
The Israel Corporation is reported to have agreed to inject $200 million to keep a 33 per cent stake in Zim, down from its present 99.7 per cent shareholding, thereby losing control of the company.
Israel Corp's controlling shareholders, Idan Ofer and his partner Udi Angel, are also expected to forego $300 million that Zim owes on ships chartered from XT Shipping (formerly known as Ofer Shipping), said Alphaliner.
The deal will also involve two shipyards, Samsung Heavy Industries and Hyundai Samho Heavy Industries, which have outstanding contracts to construct four 12,550 TEU vessels and four 8,800 TEU ships respectively.
These contracts were signed by Zim in 2007 and are expected to be cancelled, with Zim to sign replacement orders that should be around 30-35 per cent cheaper.
As of January 1, Zim operates 87 containerships totalling 332,249 TEU, of which 25 vessels of 133,394 TEU are owned.
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