Bankruptcy is nigh for THSRC: minister
By Ted Chen ,The China Post
March 18, 2014, 12:10 am TWN
TAIPEI, Taiwan -- Transportation Minister Yeh Yeh Kuang-shih (葉匡時) stated in a Legislative Yuan session yesterday that if the Taiwan High Speed Rail Corporation's (THSRC, 高鐵公司) struggling finances do not improve, bankruptcy may be a possibility before the end of this year.
Yeh stated that the newly elected THRSC Chairman is well aware of the company's financial woes, and will provide preliminary plans including the degree of capital reduction to be initiated for the company and the amount of time extension in loan repayment schedule required to steer the firm away from insolvency.
Lawmakers Express Doubts
In response, Kuomintang (KMT) lawmaker Lo Shu-lei (羅淑蕾) stated that capital reduction represents little more than accounting wizardry, and that the company must first improve its operations before new lines of capital are garnered. Lo also added that with the state holding very high portions of the company's stakes, capital reductions could have easily been conducted earlier. KMT Legislator Lee Hung-chun (李鴻鈞) added that capital reduction has already been initiated among the THRSC's five original main private sector shareholders.
Yeh acknowledged that he is aware of the five original main private sector shareholders' consent to initiate capital reduction measures, but stated the move would require the formal approval of a general shareholders' meeting by more than half of the 60,000 investors in the company, adding that he is still hoping a more feasible solution will emerge before the end of this year.
According to Yeh, losses incurred by the THRSC are currently tallied at around NT$53 billion, and that with capitalization of NT$105.3 billion, it would require capital reduction exceeding 50 percent for the company to write off the entirety of the losses. Therefore, he does not rule out the possibility that debt repayment extensions to span as much as another 20 or 30 years.
THRSC shares may be sold on open market
Hu Hsiang-lin (胡湘麟), interim director-general of the Bureau of High Speed Rail (高鐵局), stated that a number of preferred stockholders are poised to take legal action before the end of this year to demand the repayment of owed interest, and that it is crucial for the company to complete capital reduction measures to stave off the demands of the preferred shareholders. If capital reduction measures are completed, and losses written off, THRSC may seek alternative lines of credit through the sale of shares to the private sector on the open market, Hu said.
Another Delay For THSR
Meanwhile, a fire was reported at the construction site of the THSR's planned station in Tien Chung (田中), Chunghua. Although the fire department contained the situation within 20 minutes, over 800 passengers traveling on the four trains on the Changhua-Yunlin line between 3:53 p.m. and 4:24 p.m. were delayed by a period ranging between 30 minutes to less than one hour. The THSRC stated that all affected passengers will have half of their fare refunded or receive a half-price voucher usable on their next journey.