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May 29, 2017

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Taiwan High-Speed Rail seeking favorable loan terms

TAIPEI, Taiwan -- Taiwan High-Speed Rail Corp. (THSRC) is seeking more preferential terms for interest on a new NT$20 billion loan to build a new workshop in northern Taiwan and expand maintenance service.

The company that operates the Taipei-Kaohsiung high-speed rail trains also plans to revise its loan structure in order to raise new loans carrying lower interest rates to repay old debts so as to slash their financial burden.

THSRC already raised NT$308.3 billion in loans from local banks to build and run the rail system.

Executives hope to get new loans from foreign banks that promise to charge lower interest rates than local counterparts.

They are also seeking to get a nod from the banks to defer the interest on the NT$20 billion new loans for a period of three years through the coordination by the Ministry of Transportation and Communications.

Taiwan's banks have shown no sign of accepting the terms unless the government makes a strong intervention.

THSRC executives insist that the terms are a highly reasonable business deal and should not be regarded as special favors or relief from the banks or government.

They pointed out that the interest rates on old loans remain relatively higher than the rates on new loans extended by financial institutions on the market, following sustained slashes in the rates by the Central Bank of China.

The temporary three-year freeze on interest repayment will cause no loss for banks, since the deferred interest still generates new interest for them, they explained.

After launching the high-speed railway service two years ago, THSRC has served around 50 million travelers with monthly revenues reaching NT$2 billion. But the company has to pay out up to NT$1.4 billion as repayment for the loans.

Some foreign banks have shown strong interest in joining bank consortiums for the lending service because of the company's ability to generate steady income with growth potential.

Foreign banks said the government and local banks should not undermine their fair opportunities to provide lending services to help stimulate Taiwan's economy.

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