Israeli line Zim plans to return to the shipyards with a tender for 13,000 teu ships after cancelling an order for similar-sized tonnage placed when prices were much higher.
The line still wants to benefit from the economies of scale that can be obtained from the latest generation of ultra-large containerships, but has managed to greatly reduce its commitment for a series of nine 12,600 teu vessels that would have cost $170m apiece. Today, the same ships could be bought for around $100m.
Chief executive Rafi Danieli confirmed that Zim still wants to have ships of that size in its fleet, even though its has just cancelled an order for five 12,600 teu ships and may terminate the contract for the final four in the series. That option remains open until January 2014.
Agreement to cancel orders and postpone payments of $235m that were planned this year frees the company from off-balance sheet obligations of $1.4bn, should the order for all nine eventually be annulled.
In a telephone interview with Lloyd’s List, Danieli confirmed that the line hoped to open talks with shipyards about vessels of 13,000 teu that would be able to transit the enlarged Panama Canal, so providing the option to be deployed in either the Asia-Europe or transpacific trades.
Whether a new order would be placed directly, or through a long-term lease agreement with a tonnage provider, remains to be seen, he said. Zim is prepared to consider various options. The larger ships would not be needed until 2015, giving Zim time to investigate different avenues.
First, though, Zim must finalise a new five-year business plan with its banks by the end of April.
Zim’s debts stand at $2.7bn, and the goal is to get a better match between repayment schedules and revenue flow, but chief financial officer Guy Eldar said the aim was also to ensure there was agreement in principle from lenders for a renewed shipbuilding programme, taking advantage of today’s much cheaper yard prices.
Confirmation that Zim still wants to upgrade its fleet came as the line posted an accounting loss of $433m for 2012 after taking a $133m hit on the cancellation of five 12,600 teu ships ordered from Samsung Heavy Industries.
At the level of earnings before interest, taxes, depreciation and amortisation, profit amounted to $107m compared to a loss of $82m in 2011.
Zim said it had won its sponsoring banks’ “full trust and support” in waiving covenants on its debt repayments that were due this year, deferring them until the end of 2014.
Revenues amounted to $3.96bn in 2012 , a rise of 5% over the previous year, its average freight rate increasing by 2% to $1,342 per teu.
Although five of the 12,600 teu ships have been cancelled so far, Zim still has four 9,000 teu vessels on order. Two similar-sized vessels have been sub-chartered by the line to Evergreen.
Zim has been pressing for several years for a split in the business, divided between a domestic arm and its international activities, which account for around 85% in terms of revenue and volumes.
That would pave the way for an eventual IPO and a fresh infusion of capital. However, dividing Zim up in that way requires approval of the government, which holds a golden share, and this has yet to be granted.
Danieli said there had been no change in the situation over the last few months and that the new government may need more time to consider the proposition.
Zim, in which Israel Corp is the majority shareholder, said it lost $170m in the fourth quarter, compared with an operational shortfall of $126m a year earlier. That deterioration resulted wholly from the order cancellation that cost the company $133m.
The line still wants to benefit from the economies of scale that can be obtained from the latest generation of ultra-large containerships, but has managed to greatly reduce its commitment for a series of nine 12,600 teu vessels that would have cost $170m apiece. Today, the same ships could be bought for around $100m.
Chief executive Rafi Danieli confirmed that Zim still wants to have ships of that size in its fleet, even though its has just cancelled an order for five 12,600 teu ships and may terminate the contract for the final four in the series. That option remains open until January 2014.
Agreement to cancel orders and postpone payments of $235m that were planned this year frees the company from off-balance sheet obligations of $1.4bn, should the order for all nine eventually be annulled.
In a telephone interview with Lloyd’s List, Danieli confirmed that the line hoped to open talks with shipyards about vessels of 13,000 teu that would be able to transit the enlarged Panama Canal, so providing the option to be deployed in either the Asia-Europe or transpacific trades.
Whether a new order would be placed directly, or through a long-term lease agreement with a tonnage provider, remains to be seen, he said. Zim is prepared to consider various options. The larger ships would not be needed until 2015, giving Zim time to investigate different avenues.
First, though, Zim must finalise a new five-year business plan with its banks by the end of April.
Zim’s debts stand at $2.7bn, and the goal is to get a better match between repayment schedules and revenue flow, but chief financial officer Guy Eldar said the aim was also to ensure there was agreement in principle from lenders for a renewed shipbuilding programme, taking advantage of today’s much cheaper yard prices.
Confirmation that Zim still wants to upgrade its fleet came as the line posted an accounting loss of $433m for 2012 after taking a $133m hit on the cancellation of five 12,600 teu ships ordered from Samsung Heavy Industries.
At the level of earnings before interest, taxes, depreciation and amortisation, profit amounted to $107m compared to a loss of $82m in 2011.
Zim said it had won its sponsoring banks’ “full trust and support” in waiving covenants on its debt repayments that were due this year, deferring them until the end of 2014.
Revenues amounted to $3.96bn in 2012 , a rise of 5% over the previous year, its average freight rate increasing by 2% to $1,342 per teu.
Although five of the 12,600 teu ships have been cancelled so far, Zim still has four 9,000 teu vessels on order. Two similar-sized vessels have been sub-chartered by the line to Evergreen.
Zim has been pressing for several years for a split in the business, divided between a domestic arm and its international activities, which account for around 85% in terms of revenue and volumes.
That would pave the way for an eventual IPO and a fresh infusion of capital. However, dividing Zim up in that way requires approval of the government, which holds a golden share, and this has yet to be granted.
Danieli said there had been no change in the situation over the last few months and that the new government may need more time to consider the proposition.
Zim, in which Israel Corp is the majority shareholder, said it lost $170m in the fourth quarter, compared with an operational shortfall of $126m a year earlier. That deterioration resulted wholly from the order cancellation that cost the company $133m.
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