Israel Corp has confirmed that it will relinquish control over its shipping arm Zim Integrated Shipping Services Ltd., under a debt settlement plan to slash the container carrier's massive debts.
The proposed debt restructuring deal will see Israel Corp reduce its majority control of Zim from 99.7% to 32% in an undertaking to invest US$200m into Zim and write-off a debt of approximately US$225m owned by Zim since 2009.
Zim, which has been hit hard in recent years by a faltering global economy, said on Thursday the deal would cut its overall liabilities to between US$1-US$1.5 billion from about US$3 billion, with part of its debt being written off.
Israel Corp will also provide a credit line to Zim in an amount of US$50m for two years from the date of completion of the debt restructuring deal. In addition to Israel Corp and bondholders, shareholders would include overseas banks and ship owners.
Zim Chief Executive Rafi Danieli noted in a statement that "This is a long-term agreement that will grant the company the financial stability to withstand many challenges and changing market conditions," Danieli added that "Zim, which is upgrading its fleet to more efficient vessels, as well as the new shareholder structure would enable the company to form strategic collaborations for the first time."