Israel Corp. succeeds with revised Zim aid

Israel Corp. succeeds with revised Zim aid    Ocean carrier Zim said late Wednesday the board of parent company Israel Corp. has agreed a new $60 million cash infusion for the struggling line in the wake of a foiled attempt to secure $100 million of emergency funding.
   The $100 million infusion was approved by Israel Corp. shareholders on Aug. 20 but rejected by the Israel Securities Authority this week because a major Israel Corp. shareholder, the Bank of Leumi, was deemed to have a personal interest in Zim, since the bank had an outstanding $10 million loan to the liner carrier.
   Israel Corp. and Zim said Wednesday they would fight the decision and the fight appears to have worked. Israeli business daily Globes reported Thursday that Israel Corp. had reached an agreement with the securities authority over the new $60 million injection. The agreement hinges on loan guarantees by Zim to Israel Corp. shareholders, as well as reductions on charter rates from the Ofer Group, which owns 54.6 percent of Israel Corp. and separately charters vessels to Zim.
   A Zim spokeswoman confirmed to American Shipper that the new proposed infusion of $60 million is separate from the failed $100 million measure.
   Israel Corp., a holding company that wholly owns Zim, has pledged to inject $350 million into the line as it foresees Zim facing a cash flow deficit of $1 billion through 2013.
   'An agreement has been reached whereby Israel Corp. (IC) will inject $60 million to Zim as part of its restructuring plan. It is an important step towards ensuring the financial stabilization of Zim,' the carrier said in a statement. 'The cash injection follows IC's announcement at the beginning of the month that it is committed to ensuring the long term financial stabilization of Zim.'
   Early Thursday, it was unclear as to whether the new infusion would be any more successful in the eyes of Israeli securities regulators. The stumbling block in the initial infusion, in the eyes of the Israel Securities Authority, was that not a high enough percentage of minority shareholders outside of the Bank of Leumi voted in favor of the infusion.
   But, according to the Globes report, the regulators have relented over the lower infusion, which analysts and Zim executives considered critical to keep the line afloat.
   Zim's revenue fell 53 percent to $543 million in the second quarter of 2009, while its second quarter loss grew 450 percent to $185 million, the newspaper reported Thursday.