The settlement is the biggest Israel has ever seen – $1.5 billion of debt will be written off.
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The debt arrangement in shipping company Zim Integrated Shipping Services Ltd., the largest in scope ever seen in Israel, was approved on Friday at a shareholders meeting of parent company Israel Corporation (TASE: ILCO), controlled by Idan Ofer. The approval is subject to agreement with the state on the golden share in Zim that the state holds. “This is a vote of confidence in the company by Israel Corporation’s shareholders, after the debt arrangement received approval from 140 of Zim’s creditors around the world, ” Zim CEO Rafi Danieli told “Globes” after the vote.
It appears that the institutional investors in Israel Corporation voted in favor of the settlement, against the advice of consultants Entropy, which had said that the settlement was not in their interests, apparently for fear that Zim would go into liquidation.
On the question of the golden share, the Haifa District Court ruled last week that if the sides failed to reach agreement by today, it would decide for them. Zim mainly seeks to cancel the term of the golden share limiting transferability of its shares by requiring it to receive the state’s permission for the sale of control in the company or the transfer of more than 24% of the shares in it. Zim has confirmed that Israel Corporation is behind this demand.
The debt arrangement includes a haircut of 50% on a debt of some $3 billion. Israel Corporation will inject $200 million into Zim, and will be diluted from 100% ownership to a holding of 32%. It will also make available guarantees of $50 million, and will forgive $238 million of debt.
The shipping companies privately held by Ofer and his partner Udi Angel will forgive Zim debt of $300 million, representing ship leasing fees and a $50 million safety net that Ofer provided Zim in 2013.
“The company is working energetically with government ministries to reach a compromise that will preserve the vital interests of the State of Israel before the court hearing on Sunday, ” Danieli said on Friday. “Zim is sure that it will reach agreement with the Israeli government so that it will be able to continue to flourish economically and be a symbol and a source of pride for Israel all over the world.”
Published by Globes [online], Israel business news – www.globes-online.com – on June 29, 2014