Holding Company canon , Controlled by Idan Ofer, continues to sail on the waves of success of the shipping company Zim, which it owns. In the third quarter alone, Canon recorded a profit of $ 400 million on its investment in ZIM, and in total this holding resulted in Canon making a profit of $ 818 million in the first nine months of the year.
Zim, which is managed by Eli Glickman, was issued in January this year on Wall Street at a value of $ 1.7 billion after the money. Since then, the company’s share has soared more than 280%, to a price that reflects a value of about $ 6.6 billion for the shipping company. This sharp jump was recorded thanks to the fantastic results presented by ZIM this year, as a result of the surge in the marine transportation industry, which led to a dramatic increase in container transportation prices.
Canon currently owns 26% of Zim shares. In addition, Canon holds 59% of the shares of the Israeli power plant company OPC Energy, and 12% of the shares of the Chinese car manufacturer Koros.
Thanks to its investment in ZIM, Canon ended the third quarter of 2021 with a net profit of $ 186 million, compared to $ 67 million in the same quarter last year. In the first nine months of 2021, Canon posted a net profit of $ 538 million, compared to $ 362 million in the same period last year.
Deletion of the full value of Corus in the company’s books
The results in the third quarter were overshadowed by the write-off of the balance of the investment in Corus, amounting to $ 196 million, following a write-off of $ 55 million recorded in the first half of 2021. Thus, Corus is now recorded at zero value of canon books.
The reason for the full write-off lies in the closure of Corus ‘manufacturing plant earlier this year, and the decision of Corus’ controlling shareholder, Baunang Company of China, not to complete the acquisition of Corus (12%) shares held by Canon.
Baunang, which owns 63% of Corus shares, signed an agreement with Canon in April 2021, under which it pledged to buy the shares held by Canon for 1.56 billion yuan ($ 241 million).
The transaction was scheduled to take place in installments, from September 2021 to March 2023, but Baunang has not yet made any payment. The purchaser also undertook to deposit 5% of the transaction amount in a trust by the end of July 2021, but has since managed to transfer to the trustee only a sum of 1 million yuan ($ 200,000).
During the period, Bauneng sought to change the terms of the deal, but an agreement between the parties has not yet been signed, and according to Canon, it is examining several options regarding unpaid payments. Meanwhile, Corus itself is also required to settle its huge debts to Chinese banks, amounting to 4.9 billion yuan.
Banks have accelerated the repayment of loans from Corus
According to Canon, Corus is currently in talks with its financing banks regarding a change in the terms of the loan repayment, but so far such a change has not yet been agreed. In the absence of sources, Corus did not repay payments to banks amounting to 455 million yuan ($ 71 million), resulting in the banks accelerating the repayment of two loans (out of three) amounting to 3.7 billion yuan.
At the same time, the third partner in ownership of Corus, the Chinese carmaker Cherry, was required to repay to the Chinese banks the guarantees it provided to secure Corus’ debts. As a result, Canon was also required to repay back-to-back guarantees it provided to Cherry in the amount of $ 16 million, for Canon (12%) ’s stake in Corus shares.
According to Canon, it intends to transfer the payment to Cherry, thereby fully terminating the guarantees it has previously granted to Corus’ obligations. At the same time, Corus is continuing talks with its financing banks and other shareholders regarding the settlement of its debt obligations and the return to operations of its manufacturing plant, which closed earlier this year.
As of the end of September 2021, Canon had $ 238 million in cash. It has since raised OPC’s capital and sold Zim shares, so the company now holds $ 174 million in cash. During December, ZIM will distribute a $ 296 million dividend, of which Canon will receive about $ 77 million. This amount will allow Canon to pay a $ 189 million dividend to its shareholders in January, which it announced upon publication of the financial results.
Canon is traded on the stock exchange at a value of NIS 7.65 billion, after its share has risen by 58% since the beginning of the year. The controlling shareholder, Idan Ofer, holds 60% of the company’s shares.