Shareholders of Israel Corp. on Friday approved a debt restructuring agreement for Zim, its container shipping subsidiary, but the company is still trying to negotiate an agreement over the so-called "golden share" that the Israeli government maintains in the company in order to protect its national interests.
With Zim and the government not able to reach an agreement by June 29, a court gave the two sides an additional 24 hours to negotiate, a spokesman said.
The Israel business newspaper Globes
posted an item on its website at 7:28 p.m. Israel time on Monday that said the dispute over the golden share will be decided in the Haifa District Court. The paper reported that the Israeli government "was persisting in its refusal to alter the terms of the golden share, and Haifa District Court Judge Adi Zarankin is, therefore, expected to publish his ruling on the question" later today today or Tuesday.
The restructuring agreement will convert $1.4 billion of Zim’s $3
billion in debt to equity. Israel Corp. will inject $200 million into
Zim in exchange for 32 percent of the company, and arrange of
forbearance of $238 million in debt and a $50-million line of credit.
The company said the approval is still subject to an agreement with
the State of Israel to modify the terms of the special state “golden
The golden share was created for the government when Zim, formerly a
state-owned company, was privatized in 2004. It seeks to protect
Israel’s vital interest in the shipping company and protect minimum
capacity that will allow effective use of the fleet in times of
emergency; it is also said that it will prevent entities that could harm
Israel’s vital interests from having influence over Zim management.
Earlier this month, Israel’s Minister of Finance said the country would not give up the golden share,
making that decision after meeting with representatives of the Ministry
of Finance, Ministry of Defense, Ministry of Transport, and Ministry of
Justice that heard the positions of Zim and Israel's Merchant Marine
But in a press release issued Friday, Zim said, “Over the last few
days, there have been discussions under court auspices with all the key
government officials led by the managing director of the Israel Ministry
of Finance. In the course of those discussions, Zim proposed a number
of solutions, which will enable the government to maintain the
protection of vital national interests" that is currently laid out in
the special share. It will also, the company continued, "enable the
restructuring plan to go ahead and secure the company’s future."
Rafi Danieli, Zim’s president and chief executive officer, said, “The
shareholders’ approval indicates an unequivocal expression of
confidence in Zim. The company is now on the verge of a new era. We are
working diligently to reach a compromise with representatives of the
government, which will maintain all the of the state’s vital interests,
before the court hearing on Sunday. We are confident such an agreement
can be reached, allowing Zim to thrive and continue being a symbol of
Company officials maintained they have overcome a difficult market to
achieve "significant improvements" in operating results during the past
This article has been updated to reflect developments in an ongoing story.