Creditors to extend Chung Shing loans

Some 30 creditor banks of Chung Shing Textile Co (中興紡織) agreed to extend loan rollovers by one more year to the debt-ridden Taiwan clothing company at a coordinating meeting yesterday.

While banks agreed to defer Chung Shing's loan principle for another year, they failed to reach a consensus on cutting interest rates on the textile company's loans from eight percent to six percent and allow the company to pay interest half in cash and half in credit.

Chung Shing, which lost NT$915 million in the first nine months of last year, said before the coordinating meeting yesterday that it asked creditors to extend NT$11 billion (US$334 million) in debt for at least six months.

Taiwan's Bankers Association (銀行公會) last week said struggling companies that previously made loan payments will be eligible for six-month debt extensions to prevent them from going bankrupt.

In yesterday's meeting, some banks said Chung Shing has paid its loan payments regularly and therefore they would agree to postpone repayment of its principal amounts.

As for the interest payment amounts, banks said it needs further discussion.

To improve its financial situation, in recent years Chung Shing has taken a series of measures to cut debt, including selling its headquarters building located on Chunghsiao East Road to Chung Hsing Bills Finance Corp (中興票券) for NT$3.55 billion in April 1999.

While the company had earmarked much of the income for expanding its chemical fiber production and its investments in China, the new projects did not generate revenues as much as had been projected, the company said.

Taiwan's textile industry, which accounts for 9 percent of the island's exports, is being crimped by a slowing global economy.

Textile exports slumped 16 percent in the first two months of the year from the same period last year.

Most of Chung Shing's creditor banks are among Taiwan's older, more established financial institutions and include such respected names as Chiao Tung Bank (交通銀行), Bank of Taiwan (台灣銀行) and Chang Hwa Bank (彰化銀行) to name a few.