June 20--The debt settlement at Zim Integrated Shipping Services Ltd. will not go ahead, after Minister of Finance Yair Lapid rejected the demand to give up the government's golden share in the company. The main obstacle to the debt settlement was the terms of the golden share, which stipulate that the government must agree to sell of more than 25% of Zim.
The debt settlement is in the final stages of approval, with Israel Corporation (TASE: ILCO) shareholders due to discuss it at the general meeting in late June. Israel Corp. responded laconically to the government's decision, which has not yet been delivered to Zim. The Merchant Marine Officers Association welcomed the decision, which is intended to preserve Zim's Israeli connection and its commitment to continue employing Israelis.
Waiving the golden share is not a condition appearing in the wording of the debt settlement, but Zim says that it deliberately kept the demand out because its creditors agreed to the settlement on the basis of verbal understanding that the company would secure the government's waiving the golden share. Under the debt settlement, Zim shares were to be cancelled to allow the establishing of a new company with new articles of incorporation.
This morning, the Ministry of Finance announced that Lapid had decided not to forego the government's golden share in Zim, and that the government will keep it. the golden share is a list of clauses in Zim's articles of incorporation, which stipulate, among other things, that no more than 25% of the company can be sold without the government's agreement, the company must own at least 11 ships, and its executives must have Israeli citizenship.
Initially, Zim sought cancellation of the entire golden share, but in view of the harsh public criticism against the demand that the government forego Israeli interests in Zim for nothing, the company was willing to compromise. It was willing for the government to waive only the restriction of the transfer of shares and to reduce the number of ships it owed. However, the Ministry of Finance said that it refused to make any changes in the golden share's terms.
The ministry's decision came after Ministry of Finance director general Yael Andorn discussed the matter with other ministry officials and officials from the Ministry of Defense, the Ministry of Transport, and the Ministry of Justice.
Zim had already reached a deal with the Ministry of Defense to contractually promise to provide six ships to meet defense needs under certain conditions. The company plans to scrap, lease, or sell 16 of its 23 shares. The government is demanding indemnification if Zim's fleet falls below 11 ships.
"During the discussions, the state's representatives listened to Zim's position, as well as the position of the Merchant Marine Officers Association, and emphasized the strategic, security, and economic aspects for which it was decided not to amend the golden share," said the Ministry of Finance in its statement.
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