ZIM announced that it is has finalized the terms of its $3-billion restructuring plan including a $1.4 billion debt to equity conversion following protracted and complex negotiations with creditors. The company has also reached an agreement with the Israel Ministry of Defense regarding a revised “Golden Share”. Changes in the terms of the “Golden share” held by the State of Israel, once concluded, will ensure that national strategic interests are fully safeguarded, while eliminating provisions that stand in the way of implementation of the restructuring agreement.

Israel Corporation (IC) has agreed to invest additional $200 million in new equity, provide the company with a liquidity line of $50 million, and forgo $225 million of loans that were part of a $1 billion support from 2008-2012. In addition, related companies agreed to provide $180 million of support by amending charter contracts and forbearing loans. The total support of IC and related parties in the last years will amount $1.4 billion. Following the restructuring, Israel Corporation will see its stake reduced from 100 per cent to 32 per cent, subject to relevant creditor and shareholder approvals.

The new structure, which involves a substantial reduction in indebtedness through the write off of some $1.4 billion of debt and the injection of new equity, will enable ZIM to compete successfully in the global shipping market. The estimated equity valuation of “New Zim” is $600-800 million.

The Agreements, which are still subject to shareholder, credit committees and regulatory approvals, will enable ZIM to explore opportunities for strategic partnerships and joint ventures with a view to raising additional capital to fund fleet renewal, IT systems upgrades and further business development.

Chief executive Officer Rafi Danieli said: “We are delighted to have reached these agreements after many months of hard work. We are grateful to IC for all of its support and additional investment and to all our creditors for their efforts to get us to this point and for the support they have given to the management team and the business plan. We are confident that the “New ZIM” with its strong balance sheet is well placed to open a new exciting chapter in its development.”

Meanwhile, ZIM reported a loss before interest charges of $8 million for the first quarter of 2014, reflecting a sharp improvement compared to the same quarter of 2013 which saw an operating loss of $47 million. Q1 EBITDA was $29 million against a $6 million loss in the same quarter of last year.

The volume of containers carried increased by 2 per cent compared with the same quarter of last year, to 617,000 TEUs. Revenues in Q1 were $867 million compared with $918 million in the same quarter. The decrease in revenues, in spite of an increased volume of containers carried, reflects continued downward pressure on freight rates. Average freight rate per TEU was $1213, a decrease of $69 (5 per cent) compared with Q1 of last The company is continuing to seek efficiency savings as part of its strategy of seeking to offset continued weakness in freight rates.

ZIM CEO Rafi Danieli said “ZIM employees must take their share of responsibility for the company’s future and join in the effort to successfully complete the restructuring. Their cooperation is vital to ensure that the company can benefit from the restructuring and move ahead as the “New ZIM”. We believe that the new structure and strategy will benefit the employees in the long run. With a dramatically improved balance sheet and cost structure, and the support of a committed workforce, the company is poised for a dramatic improvement in profitability over the coming years.”