Monday, September 28, 2009
Zim delays vessel orders; requests debt repayment extension
Haifa: Troubled Israeli container line ZIM Integrated Shipping has reached an understanding with shipyards regarding postponing the delivery of four new ships, writes source Your Industry News.
The understanding in principle involves four 10,000teu ships originally due to be delivered next year, which have been postponed until 2014 or 2015. This follows a recent understanding to postpone delivery of nine 12,600teu ships until 2014 or 2015.
This extension of delivery dates marks a major step in completing ZIM's recovery plan, enhancing the company’s cash flow by deferring investments of up to US $2 billion.
ZIM ceo, Rafi Danieli: “This understanding reflects the shipyards’ clear expression of confidence in ZIM’s recovery plan and in the company’s long term commercial success.
“As with the rest of the shipping industry, ZIM has recently been faced with very challenging market conditions in the depths of a major downturn. Industry experts predict that by 2014-2015 we’ll be well past the current crisis and the market will have recovered. Based on these estimates we look forward to strong market conditions that will enable ZIM to grow, prosper and benefit from the new, efficient fleet at the right time.
“The understandings were achieved in part thanks to the Ofer Group’s strong position in world shipping.”
ZIM has previously estimated that 2011 will see the first signs of a sustained, albeit gradual upturn in the marine transportation market. Prevailing industry forecasts anticipate significantly improved trade terms in 2012-2013, due to increased demand in world markets and the delay in delivery of new vessels.
Based on this timeline the company expects to reach an operating profit of around US $100 million in 2011, growing to about US $350 million in 2012, and around US $500 million in the year 2013.
Danieli added: “The 2009 year will mark a uniquely difficult period in terms of the severity of this global shipping crisis. We have worked to ensure we’re fully prepared for continuing weakness in the market throughout 2010, and our recovery plan includes adequate measures to cope with this situation. This conservative approach means we will be in a strong position when the industry cycle starts to improve. We believe we will see a gradual recovery in 2011 at the latest, getting us back to profitability and positive returns for our shareholders thereafter.”
The figures outlined above were published by Israel Corporation ahead of the general shareholders meeting due to approve ZIM’s recovery plan in mid October. Israel Corporation will also use the meeting to seek approval for US $450 million to support ZIM’s recovery plan.
This will include a reduction in charter costs by parties connected to the Ofer Group, already agreed at approximately US $150 million over four years.
Danieli concluded: “Additionally, I would stress that ZIM is not asking bond holders to write off any debt, instead requesting only to extend the original repayment schedule.” [25/09/09]
