27 Februari 2014

[270214.EN.SEA] Zim Faces Legal Challange To Prevent Reduction of Israel’s Golden Share

ISRAELI container shipping line Zim's proposed capital and debt restructuring deal announced last month has been met with an outcry and instigated a legal challenge to block an alleged impairment of the Israeli government' s golden share in the company.

A golden share gives the government the right of decisive vote, thus to veto all other shares, in a shareholders meeting, regardless of the amount of voting stock it holds.. 

Israel's National Naval Officers Association and "other parties" have filed a petition to the Supreme Court against Israel's Minister of Finance, the Minister of Transport and the Government Companies Authority as well as against Zim, reported Lloyd's List.

While not disputing the necessity of the Zim deal with its creditors, the petitioners argue that the proposal includes an unnecessary "reduction, amendment, or impairment" to the state's special share in the carrier that was granted in 1995.

They also argue that the willingness to waive or amend the golden share will benefit Zim's shareholders "at the expense of public interests, which were outlined in the golden share."

The petitioners are also seeking answers as to why ministers did not act to protect the golden share or seek "less harmful alternatives."

In a statement to the Tel Aviv Stock Exchange, Zim's majority owner, Israel Corp, said: "The company is currently studying the petition, and to the extent required, the company will present its position.

Zim's restructuring deal allows creditors to write off a large amount of debt in exchange for equity, and postpone loan maturity dates.

In the event that the counter parties agree to the proposals, Israel Corp's s shareholding would be reduced from 99.7 per cent to about 32 per cent and Zim's debts would be halved to US$1.5 billion.

Israel Corp would also inject into Zim $200 million in fresh capital, and waive $225 million of deferred debts that arose when ship charter rates shrunk in 2009. 

Source : SN-TR, 22.02.14.

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