In a note to the Israeli stock exchange, Zim parent said it would seek to extend loan periods from its creditors, and most notably, given ship owners from which it charters a stake in the company starting from 2016.
The plan for raising cash involves offering ship owners promissory notes ahead of a planned September 2016 public offering in exchange for the ship owners lowering charter rates in the short term. Those lower charter rates would free up about $150 million over the next few years.
Israel Corp. has estimated that Zim will face a cash flow shortage of $1 billion through 2013 and it attempts to navigate a historically difficult market for ocean carriers. The company's shareholders have pledged $350 million in loans to support the carrier, which is wholly owned by Israel Corp., Israel's largest holding company. An initial $50 million loan was approved just a few weeks ago and another $100 million is expected before the end of 2009.
Without all the elements of the restructuring occurring, Israel Corp. said Zim would face a difficult time existing as a 'going concern.'
Meanwhile, Standard & Poor's on Tuesday lowered Zim's bond rating on three series of bonds, worth $345 million, issued in 2005-06 from B to CC.
The Zim statement is available here.
