Wednesday, September 23, 2009

Zim cuts charter payments to shipowners

Zim is strapped for cash and has apparently, just started paying 35% less to the owners of the chartered ships in their fleet.

One of them has rejected this reduction. I can't say I blame them. They have the ships on a 12 year charter. Everyone thought the international shipping business would just keep going up and up, and thought "hey, let's lock in these prices for 12 years". Well, it didn't work out that way, but I am sure the contracts did not have any stipulation for this type of reduction, and now, one owner, Danaos, is saying they won't accept the offer from Zim.

I don't know what Zim will do if they really play hard-ball. The only way they could legally get out of this mess will be to file some sort of bankruptcy reorganization. I don't know if Israel has laws which allow this.

From Lloyd's List

Marcus Hand, Singapore - Wednesday 23 September 2009

DANAOS has rejected a move by financially strapped Zim Integrated Shipping Services to cut its containership charter hire payments by 35%.

The New York-listed shipowner said Zim had, from the beginning of September, unilaterally started to cut hire payments to shipowners by 35% for a period of three years. Danaos has six boxships on 12 year long charters to Zim and rejected the charter hire cuts.

“Danaos has not accepted this offer, nor acquiesced to this reduction, and it is in discussions with Zim and evaluating the situation,” Danaos said.

Zim also has ships on hire from Costamare, Rickmers Reederei, ER Schiffahrt, Hansa Treuhand, Zodiac Maritime and Ofer Brothers.

Zim has already reached agreement with companies related to Israel Corp to reduce charter rates by an accumulated $150m over the coming years, pending shareholder approval and agreements with other shipowners.

Last week Zim’s parent Israel Corp said shipowners that agreed to charter rate cuts would be offered promissory notes that will be convertible into shares, with the shipping company to be spun off within the next seven years.

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