ZIM on the verge of closing a financial restructuring deal for the carrier after garnering US$1.4 billion.
Israeli shipping line Zim Integrated Shipping Services Ltd. said last week that it was on the verge of closing a financial restructuring deal for the carrier after garnering US$1.4 billion through "understandings and agreements" with banks, bondholders, shipyards and ship owners, which hold about 95% of Zim debts.
The statement said that the financial restructuring involve a combination of deferred loan repayments and new finance. The next step in the Zim saga will unfold on November 1 when the restructuring plan will be put to vote by Israel Corp shareholders.
According to the plan, ZIM will receive more than $500 million in new financing from the company's banks (both Israeli and foreign), to be provided in 2009-2010. This funding will be scheduled for repayment over more than 10 years and enable ZIM to finalize its purchase of new vessels in the coming years. Delivery of most of ZIM's ordered vessels has already been deferred by periods of two to five years.
This funding is part of a larger restructuring agreement with the banks that also includes the rescheduling of debt repayments ? with repayment periods in some instances extending up to 10 years. Additionally, the banks have also agreed to grant ZIM full or partial grace periods of up to three years on principle repayments.
Israel Corporation will invest more than $450 million, which includes the conversion of existing loans; and along with related parties will provide a $100 million safety net to ensure sufficient liquidity for ZIM should circumstances require.
Israel Corporation will also retain an option for a financial reserve of $50 million, to be used as needed for ZIM's liquidity needs and operational purposes, for Israel Corporation to utilize at its discretion.
ZIM's bonds (worth approximately US$350 million), which were previously due for repayment between 2012-2015, will now be paid in full and deferred to 2016, with an option to defer further to 2017-2020. Similar terms will be offered to ZIM's unsecured lenders.
CEO Nir Gilad said that "This plan stabilizes Zim"s financial position and creates a solid foundation for the company,?. Gilad added that ?This will enable Zim to overcome the current shipping crisis successfully and provide a strong return on Israel Corporation"s investment. The complexity and scale of this restructuring plan are so great that it can only be achieved with the participation and cooperation of all parties?.