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Zim Completes $3.4 Billion Restructuring

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July 17, 2014

Zim Rio Grande, image courtesy Huhu Uet

reuters logoJERUSALEM, July 17 (Reuters) – Israel’s biggest shipping firm Zim said it completed a more than $3 billion debt restructuring that will allow the company to capitalise on the recovery in global trade.

Zim said on Thursday its lending banks, ship owners and bondholders agreed to support a restructuring plan in which creditors converted $1.4 billion of Zim’s total debt of $3.4 billion debt and liabilities into a 68 percent ownership stake in Zim.

Israel Corp, which had held nearly 100 percent before the deal, invested $200 million of new equity in return for dropping its stake to 32 percent and will also provide a $50 million receivables financing facility, Zim said.

“Israel Corp’s willingness to forego its Zim shares and transferring them to the creditors has been a significant contribution to the restructuring, and the $200 million investment enabled the successful conclusion of the process,” said Zim Chief Executive Rafi Danieli.

Zim’s remaining debt will mainly consist of debt secured by vessels and unsecured notes listed on the Tel Aviv Stock Exchange with a maturity of nine years.

“Zim’s restructuring provides the company with a stable, long-term capital structure,” it said in a statement. “The company will now focus on the implementation of its business plan, with a view to achieving profitability in the near future.”

The restructuring comes after Israel Corp and the Finance Ministry earlier this week reached a compromise regarding the government’s “golden share” in the world’s 17th biggest shipping company.

The compromise allowed the government to keep its golden share, which gives it veto power over some major decisions and requires Zim to operate ships during times of emergency.

Zim, with a 2 percent global market share, has been hard hit by the prolonged global economic downturn. It posted a loss of $63 million in the first quarter, compared with a $112 million loss in the first three months of 2013. (Reporting by Steven Scheer)

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