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Zim’s future is still uncertain

Zim’s future is still uncertain

Alphaliner reports that Zim has recorded a full year net loss of U$535m, the worst annual result in the company’s history. Operating losses reached US$139m, excluding US$53m in non-recurring items, primarily from impairment charges for vessel cancellations and early retirement payments which was offset by disposal gains from the sale of two Chinese container manufacturing factories.

The loss brought Zim’s shareholder equity to US$582m against debt obligations of US$2,520m. Zim remains the only major carrier with negative equity and is in discussions with its creditors to write off a large part of its outstanding debt.

Zim signed a MOU with most of its creditors on January 22, 2014 for an arrangement outlining a restructuring of Zim’s capital and debt structure. The deal would involve the reduction of the Israel Corp’s stake from 99% to 32%.

Under the proposed deal, Israel Corp will inject US$200m as additional capital in Zim and waive US$225m of debt owed by Zim (which is composed of debts under a 2009 debt arrangement). It will also provide US$50m credit line for a period of two years from the completion date of the arrangement.

Zim expects the restructuring to be completed within the next three months, which it says will then open new opportunities for the company, including the possibility to join one of the existing carrier alliances and raise fresh capital. The company also added that it plans to order new vessels with deliveries aimed at coinciding with the commissioning of the new Panama Canal locks 2016.

The move follows the cancellation of all of Zim’s outstanding vessel orders at the end of January that were signed at the peak of the market in 2007-08.