TEL AVIV, Jan 23 (Reuters) – Israeli shipping company Zim agreed a restructuring deal with most of its creditors that will see part of its debt swapped for shares and cut parent company Israel Corp’s stake to less than a third.
Zim, which has been hit hard in recent years by a faltering global economy, said on Thursday the deal would cut its overall liabilities to between $1-$1.5 billion from about $3 billion, with part of its debt being written off.
Creditors would also receive 68 percent of Zim’s equity, which it would seek to list.
In addition to Israel Corp and bondholders, shareholders would include overseas banks and ship owners.
Zim, which is upgrading its fleet to more efficient vessels, said the shareholder structure would enable the company to form strategic collaborations for the first time.
“This is a long-term agreement that will grant the company the financial stability to withstand many challenges and changing market conditions,” Zim Chief Executive Rafi Danieli said in a statement.
Israel Corp, which owns 99.7 percent of Zim, will inject $200 million into Zim’s capital and, on completion of the restructuring, hold 32 percent of the firm and remain its biggest shareholder.
Israel Corp shares were 1.2 percent lower in midday trade in Tel Aviv.
Its controlling shareholder is billionaire Idan Ofer, whose family made its fortune in the shipping industry.
One of Israel’s largest conglomerates, Israel Corp was hard hit last year by the closure of Better Place, whose battery charging network had aimed to boost electric car sales. Better Place has lost more than $800 million since 2008.
Israel Corp also controls Israel Chemicals, the world’s sixth-largest potash producer whose profits have fallen on weakness in the potash market, as well as Oil Refineries .
In June, Israel Corp said it was considering splitting into two companies in a bid to attract a broader range of investors.
The Zim agreement remains subject to a range of approvals. (Editing by Steven Scheer, John Stonestreet)
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