Sources inform ''Globes'' that two large investment institutions estimate that Zim Integrated Shipping Services Ltd. will report a loss of $150 million for the second quarter, which will severely affect the results of its parent company, Israel Corporation (TASE: ILCO), as well as Israel Corp. shareholder and Zim bondholder Bank Leumi (TASE: LUMI).
The failure yesterday by Israel Corporation to obtain shareholders approval of a $100 million capital injection into Zim will cause the companies' executives and controlling shareholder Ofer Holdings Group major headaches. Israel Corp. estimates that Zim will suffer a cash flow deficit of $1 billion through 2013. Israel Corp. therefore planned to inject $350 million into the company, the first installment of which was torpedoed by the shareholders yesterday.
One of the investment institutions said, "The shipping industry may not recover until 2015, and there are even more pessimistic forecasts. This means that Zim's deficit will be even larger."
Israel Corp. will reportedly make a $120-150 million write-off for Zim in its financial report for the second quarter. The write-off could push Israel Corp. into a loss of up to $130 million for the quarter.
Analysts are preparing quite dismal scenarios, and do not rule out that Zim's upcoming financial report will include a going concern warning, indicating that the company may not be able to pay its debts.
Israel Corp. has not yet commented officially on the matter.
Israel Corp.'s share fell 2.4% by mid-afternoon to NIS 24.80. Bank Leumi's share rose 0.8% to NIS 14.
Published by Globes [online], Israel business news - www.globes-online.com - on August 26, 2009
© Copyright of Globes Publisher Itonut (1983) Ltd. 2009