Israeli shipping company Zim has reached an agreement with its creditors to restructure $115m worth of debt, in an effort to shore up its finances.
The news comes as Zim announced a loss of $74m for the second quarter of 2016, citing the ongoing low freight rates and oversupply in the industry as the primary causes. Rafi Danieli, chief executive at Zim, said: “The very challenging market situation impacts the industry as a whole,”
“This is a long-term agreement that will grant the company the financial stability to withstand many challenges and changing market conditions.”
Following the collapse of Hanjin Shipping, the markets are keeping a very close watch on the financial health of other shipping lines, with the $3bn debt pile for Zim flagged as a potential problem.
The restructuring will ease these fears, as part of the deal will see a number of creditors swap debt for shares, handing over ownership of two-thirds of the company in the process.
After the announement, Danieli remained confident of Zim’s continued success: “Our strategic business plan, focusing on select markets where the company has a competitive advantage, is keeping ZIM in the top of the industry in terms of EBIT margins. The company keeps investing in customer service excellence and on-time delivery to our customers, as evident in a recent first place ranking awarded to ZIM in a schedule reliability performance report.”
