[100112.EN.SEA] Zim's Finances Come Under Closer Scrutiny As Investors Grow Anxious

ISRAEL Corp is coming under mounting pressure to inject more funds into its container shipping line Zim, after the Israeli carrier failed to meet a December deadline to obtain waivers on financial covenants on its debt, reports Alphaliner.

As a result of not reaching agreement with its creditor banks, affected debt of about US$2 billion on Zim's balance sheet will be listed in its 2011 financial report as short-term debt, instead of long-term debt.

Zim's total debt stood at US$2.59 billion as of the end of September, 2011, far short of the shareholders' equity of $500 million.

"Although Zim creditors could theoretically call for immediate repayment of the debt, such a move would result in the company being declared insolvent, which the banks would try to avoid," said Alphaliner.

The report added that a deal is likely to be proposed to its creditors later this month under a new business plan that will include a change in Zim's capital and debt structure, and would likely involve many layoffs.

It is anticipated that the carrier will post a net loss of more than $300 million in its 2011 financial year. For the first nine months of 2011, it posted a net loss of $238 million.

Source : HKSG.