ISRAELI shipping line Zim faces stormy waters after
Standard and Poor's (S&P) announcement that the carrier's credit rating may
deteriorate further and its parent, Israel Corp, can no longer be relied upon
for bailouts.
Warned S&P: "There has been a further worsening
in the credit quality of Zim (B/Negative), reflecting its short term liquidity
crisis due to the continued weakness in its operating performance, inter alia,
as a result of highly unfavourable terms of trade in the shipping industry.
"While Zim, which constitutes some two per cent of
the company's (Israel Corp) investment portfolio, is currently pursuing a
solution to its liquidity crisis, we believe that Israel Corp will not serve as
Zim's deep pocket as it did in the debt settlement of 2009 and 2010. In our
opinion, such assistance, should it be forthcoming, will not be on the same
scale as seen in the past."
S&P warned in the report that Israel Corp's stable
credit profile could be harmed and come under "negative pressure," if
it decides to inject considerable sums into Zim, reports Alphaliner. The Israel
Corp holds 99.7 per cent of Zim's share capital, with the remainder held by the
Israeli government.
The shipping line has suffered accumulated losses of
US$1.3 billion since 2008, with 14 negative quarters up to the third quarter of
2012. Its equity base has shrivelled up to $198 million in spite of two rounds
of capital injections supported by Israel Corp and its controlling
shareholders, the Ofer Group, in 2009 and 2012.
Source : HKSG.
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