Two weeks after Israel Corp. published the outline of the arrangement emerging with the creditors of shipping company Zim, which it controls, it seems that it is also seeking to reach an arrangements with Zim’s bondholders.
At a bondholders’ meeting held today in Tel Aviv, Zim’s management sought to reach an arrangement with the bondholders by the end of the month. At the end of the meeting, it was decided that Adv. Avraham Well should be appointed as representative of the bondholders.
Today’s meeting was a joint meeting for holders of all series of Zim bonds, which total NIS 1.3 billion. Repayment of the bonds is due to begin only in 2012, but Zim estimates that it will have a negative cash flow of about $1 billion over the next few years, and the company is therefore starting negotiations on a debt arrangement now.
In the debt arrangement with it the lender banks, Israel Corp. is due to inject $350 million into Zim, in exchange for rescheduling of $1.1 billion of Zim’s debts to the banks. Israel Corp., controlled by the Ofer family, previously announced a $100 million long-term loan to Zim.
The institutions represented at today’s meeting wondered why an arrangement was being sought already, and demanded that the controlling shareholders should put their hands in their own pockets. “Unless the insider deal with Israel Corp. is deferred, there’s nothing to talk about,” one of the institutional investors told “Globes”.
A senior representative of another institutions was more conciliatory. “The debt to the banks is larger, and it is still to early to comment of Israel Corp.’s intentions. We have to examine the details and the implications.”
Zim CFO Alon Raveh said, “Despite the company’s difficult position, Israel Corp. asked that we should not seek to write down bondholders’ debt, but only to defer payments.” He said that the banks were not prepared to reschedule debts unless the company reached an arrangement for deferring payments to its bondholders, and stressed that, “in the event of liquidation of the company, a sale of the assets will not suffice to cover the obligations.”
Published by Globes [online], Israel business news - www.globes.co.il - on August 16, 2009
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