Israel Corp., parent of Zim Integrated Shipping Services, announced it will hold a special shareholders meeting Oct. 14 to approve a restructuring plan for the struggling ocean container carrier.
The plan includes delaying payment of principal on Zim bonds until the carrier pays off its secured debt.
The restructuring “is based on the assumption that the problematic situation in the shipping market will continue in 2009 and 2010 and only in 2011 will there begin a gradual recovery," Israel Corp. said in a statement to the Tel Aviv stock exchange.
Zim already has agreed with its lenders to only pay interest on its debt and not the principal until the restructuring plan has been approved.
Under the restructuring program, Zim would defer payment of principal on its bonds for a few years until it pays off its secured debt. During this time it will pay a certain amount of interest and give bondholders the right to share in profits.
Zim will also offer bondholders the right to convert their bonds into shares in the company.
The bondholders are leading Israeli institutional investors who also own shares in Israel Corp.
Israel Corp. said last month it will inject $60 million into Zim and reduce by $150 million charter payments on ships owned by the Ofer group, which owns 55 percent of the oil-to-chemicals conglomerate.
Zim, which was in the middle of a major expansion program when the container market slumped a year ago, has said it expects a cash flow deficit of $1 billion between 2009 and 2013.
Israel Corp. plans to provide $350 million of funding to Zim, but a bid to release an initial $100 million failed last month after securities regulators discounted votes of "interested" parties, including Bank Leumi, which owns 18 percent of Israel Corp. stock and is a creditor to Zim.
The restructuring plan also includes laying off employees, reducing cargo capacity, rationalizing liner services and cancelling and delaying deliveries of new ships.
Zim's second quarter loss widened to $186 million from $42 million in the same period in 2008, for a first half deficit of $305 million.
Zim is the world's seventeenth largest ocean carrier with 92 ships, including 63 chartered vessels, totalling 279,081 TEUs, according to Alphaliner, the Paris-based research consultancy. It has 29 ships of 244,604 TEUs on order, equivalent to 88 percent of its current capacity.
The plan includes delaying payment of principal on Zim bonds until the carrier pays off its secured debt.
The restructuring “is based on the assumption that the problematic situation in the shipping market will continue in 2009 and 2010 and only in 2011 will there begin a gradual recovery," Israel Corp. said in a statement to the Tel Aviv stock exchange.
Zim already has agreed with its lenders to only pay interest on its debt and not the principal until the restructuring plan has been approved.
Under the restructuring program, Zim would defer payment of principal on its bonds for a few years until it pays off its secured debt. During this time it will pay a certain amount of interest and give bondholders the right to share in profits.
Zim will also offer bondholders the right to convert their bonds into shares in the company.
The bondholders are leading Israeli institutional investors who also own shares in Israel Corp.
Israel Corp. said last month it will inject $60 million into Zim and reduce by $150 million charter payments on ships owned by the Ofer group, which owns 55 percent of the oil-to-chemicals conglomerate.
Zim, which was in the middle of a major expansion program when the container market slumped a year ago, has said it expects a cash flow deficit of $1 billion between 2009 and 2013.
Israel Corp. plans to provide $350 million of funding to Zim, but a bid to release an initial $100 million failed last month after securities regulators discounted votes of "interested" parties, including Bank Leumi, which owns 18 percent of Israel Corp. stock and is a creditor to Zim.
The restructuring plan also includes laying off employees, reducing cargo capacity, rationalizing liner services and cancelling and delaying deliveries of new ships.
Zim's second quarter loss widened to $186 million from $42 million in the same period in 2008, for a first half deficit of $305 million.
Zim is the world's seventeenth largest ocean carrier with 92 ships, including 63 chartered vessels, totalling 279,081 TEUs, according to Alphaliner, the Paris-based research consultancy. It has 29 ships of 244,604 TEUs on order, equivalent to 88 percent of its current capacity.