Zim to return NIS 45m to settle Israel Corp. shareholder suits
Saturday, 25 February 2012 | 00:00
The suits, which were initiated by shareholders Yaakov Zelekha and accountant Boaz Yifat, were over a $246 million investment by Israel Corp. in Zim's share capital in 2008 for warrants issued by Zim.
Shipping giant Zim will have to return NIS 45 million to its parent company, Israel Corporation, following the settlement of two shareholder lawsuits this week.
Israel Corp., its directors, and its Zim Integrated Shipping Services subsidiary reached a compromise settlement on the lawsuits launched against them and interested parties in November 2009 as derivative actions on behalf of Israel Corp. shareholders. The suits, initiated by shareholders Yaakov Zelekha and accountant Boaz Yifat, were over a $246 million investment by Israel Corp. in Zim's share capital in 2008 for warrants issued by Zim.
Zelekha and Yifat asserted that Israel Corp. suffered $246 million in damage from participating in Zim's warrants offering, plus $111 million transferred to private companies owned by Idan Ofer and Udi Angel - who hold controlling stakes in Israel Corp. - in fees for ships leased to them by Zim. The litigation was based on the claim that the decision to participate in the offering didn't follow procedures required under law, that Israel Corp. officers were in violation of their duties toward the company, and that all or some of the respondents didn't act in good faith.
Under the compromise settlement, which was approved by Israel Corporation's board of directors and audit committee and will be submitted for approval by the Tel Aviv District Court - and in which neither side will be required to admit to claims made by the other side - Zim will pay Israel Corp. NIS 45 million.
However, the payment, which represents 4.9% of the sum received from Israel Corp. in the warrants issue, won't be remitted until Zim completes the payment in full of $400 million owed to bondholders, banks, and ship owners.
The settlement was reached while Zim is negotiating to reschedule the repayment of $2 billion in bank loans after failing to meet its financial covenants under the loan agreements and concern that the banks will demand immediate repayment.
Ofer Holdings, controlled by Idan Ofer and Angel, agreed as part of the settlement to postpone payment of another NIS 45 million owed it by Zim for ship-leasing fees until after Zim physically transfers the amount of the compromise agreement to Israel Corp. Zim, however, will continue paying lease fees to Ofer Holdings as usual.
The compromise therefore doesn't bring much in the way of sweet tidings for Israel Corp. shareholders in any immediate way, but the litigants and their lawyers will be well rewarded for their efforts.
Within 14 days of the agreement's acceptance by the court, a general meeting of Israel Corp. shareholders will be asked to approve payments under the settlement. Then Amit Manor and Yuki Shemesh, Zelekha's attorneys, and Menachem Gelbard, Yifat's lawyer, will each receive 5% of the settlement amount: NIS 2.25 million. Zelekha and Yifat will each get 0.5% of the amount - NIS 101,000 each.
This is the second time within eight months that one of the country's major holding companies has had to compromise in a class action: Koor Industries agreed to pay the public shareholders of Makhteshim Agan Industries $45 million following the filing for a derivative shareholders suit by accountant Dov Kahana. For his troubles, Kahana received much more than Zelekha and Yifat: $1 million, representing 3% of the settlement. Attorney Itzhak Aviram, who represented him, received $2 million, 5% of the total sum.
Source : Haaretz