Zim Integrated Shipping Services Ltd., Israel's biggest shipping company, is exploring a sale of its global container network as part of an effort to turn itself into a regional Mediterranean carrier, according to people with direct knowledge of the matter.
"Zim is on the market," one of those people said. "Their bankers are traveling around the world with a sale prospectus, tapping interest from global shipping majors and other investors."
A second person said Zim's plan is to split the company into an international part that it wants to sell, while holding on to a handful of ships for Mediterranean trades.
"The part they wantsell is their ships and customer base on the routes they have from Asia to the U.S., from Asia to the East Mediterranean and from the Mediterranean to the U.S.," this person said.
Marine data provider VesselsValue values Zim's entire fleet at around $267 million.
A Zim spokesman denied the international operations were up for sale.
"Zim is rejecting the rumor that it has intentions to sell its global shipping operations," the spokesman said. "We have been a global player for the past few decades and we have no intentions whatsoever to stop [providing] world-wide services to clients," he said.
Zim is 32% owned by Kenon Holdings Ltd., a holding company based in Singapore and listed in the U.S. and Israel. The rest is owned by banks and shipowners.
A Kenon spokesman said he would not elaborate on Zim's comment.
Basil Karatzas, a New York-based maritime adviser who works with the industry's biggest operators, said he believes onlyseven of Zim's 19 container ships would attract buyers' interest, given that they carry up to 10,000 containers each. The rest of Zim's fleet are smaller ships, which are fast becoming obsolete after the expansion of the Panama Canal.
"If there is interest, it will likely be on those ships," he said. "In this kind of market there are no premiums offered to shipping companies for their customer base or anything else. It's just their hardware."
As a small global carrier, Zim has been hit hard by the deep industry slump that has spanned two years as anemic global growth and a glut of tonnage in the water have pushed freight rates to levels barely covering fuel costs.
Korea's Hanjin Shipping Co., the world's seventh-biggest container operator, filed for court receivership in August and is being chopped up and sold in pieces. Most of the other top 20 industry players are either joining alliances or merging to weather the crisis.Lars Jensen, chief executive of SeaIntelligence consulting in Copenhagen, said Zim can't join any alliances as its ships are barred from entering ports of Arab countries that don't recognize Israel.
"That leaves them in a precarious situation," he said. "They can ether grow in scale to compete with the big boys?something they can't afford, or become smaller and focus on a niche. Being a Mediterranean player also serves the strategic interests of the state of Israel."
Zim reported in October a second-quarter loss of $74.2 million and said it had agreed with creditors to defer $115 million of coming payments until 2018. Its net debt stands at $1.1 billion.
Write to Costas Paris at email@example.com
(END) Dow Jones Newswires
November 04, 2016 16:05 ET (20:05 GMT)
Copyright (c) 2016 Dow Jones & Company, Inc.