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Bank Leumi and members of the Ofer family may not vote at the shareholders assembly that Israel Corporation is holding today to approve a further $100 million infusion to Zim Integrated Shipping Services. Zim is a subsidiary of Israel Corporation, which belongs to the Ofers and in which Bank Leumi owns a 20% interest.

Altogether, Israel Corporation plans to inject $450 million into Zim, to keep the haulage company afloat while the global shipping industry struggles. The Israel Corporation owns 98.7% of Zim's shares.

Zim's management is in parallel negotiating to reschedule its debt to the company's bondholders in Israel and foreign banks.

The watchdog's ruling was a surprise to the Israel Corporation management. It had been assumed that since Zim's debt to Bank Leumi, $10 million, is negligible in comparison with the value of the bank's holding a 18% stake in Israel Corporation, the bank would be allowed to vote at the general assembly of shareholders. That 18% stake is worth NIS 3.3 billion, at present market valuations.

However, the Securities Authority regulators, headed by chairman Zohar Goshen, opines that Leumi has a "personal interest" in pushing through the infusion, since the bank not only lends to Zim but also to other Israel Corporation subsidiaries, including Israel Chemicals and Oil Refineries.

As for the Ofer family, sources near Israel Corporation say that even though other companies they own lease ships to Zim, the family can't be considered as having a personal interest in the cash injection. Israel Corporation intends to appeal the Securities Authority's ruling.

Zim owes its bondholders NIS 1.3 billion, which it's supposed to start repaying in 2012. Meanwhile, given the crisis in the shipping industry, Zim estimates that over the next four years it will accrue a cash flow deficit of a billion dollars. In other words, given that it expects to be strapped for resources in 2012, it hopes to reschedule its debt with bondholders. Zim also owes foreign banks $1.7 billion and owes shipping builders another $350 million.