High Shipping Costs Are Here to Stay Says Bloomberg
By Henry Ren (Bloomberg) Stubbornly high shipping expenses for businesses are getting sealed into contracts for the next 12 months, forcing companies to pass the extra costs on to consumers....
TEL AVIV, Jan 16 (Reuters) – The Israel Corp holding company is set to lose control of shipping company Zim under the terms of a bailout agreement being negotiated with Zim’s creditors, Israeli media reported on Thursday.
The agreement would reduce Zim’s 3 billion shekel ($860 million) debt by half, making it the largest debt reduction ever for an Israeli company, TheMarker financial newspaper said.
Israel Corp, which owns all of Zim, would hand over its shares in the company to creditors and inject $200 million into Zim to buy back a 30 percent stake in the restructured company, TheMarker said.
Spokesmen for Israel Corp and Zim declined to comment but said a statement would be issued to the Tel Aviv Stock Exchange once a debt agreement is reached.
Loss of control of Zim would be a blow to billionaire Idan Ofer, Israel Corp’s controlling shareholder, as his family made its fortune in the shipping industry.
Zim was hurt by the global financial crisis and four years ago had to write down part of its debt. Zim’s largest groups of creditors are banks, shipyards and ship leasing companies, and bondholders.
Zim, the world’s 17th largest shipping company, lost $44 million in the third quarter and had a “going concern” warning in its third quarter results.
Last month the Israeli unit of Standard & Poor’s lowered its rating for Zim to “CC” from “CCC”, citing a likelihood of a debt restructuring in the near term.
($1 = 3.49 shekels) (Reporting by Tova Cohen)
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