Thu, Dec 26, 2002 - Page 10 News List

Legislators want Yieh Loong investigated

STOCKHOLDERS' RIGHTS Legislators are suspicious about the possible reasons why a profitable re-investment firm of China Steel Corp had one of its checks bounced

By Joyce Huang  /  STAFF REPORTER

Yieh Loong Co (燁隆) -- a re-investment company of China Steel Corp (中鋼) that makes NT$2 billion in profits per year -- shocked the business community on Tuesday when a check for NT$49 million that it wrote bounced, triggering concern among lawmakers over the rights of the company's stockholders.

At yesterday's meeting of the legislature's financial committee, DPP Legislator Lin Wen-lang (林文郎) lambasted Yieh Loong Chairman Lin I-shou (林義守) -- who is also a national policy advisor -- for the company's "immoral" conduct.

Lin Wen-lang said the company's move has negatively impacted the performance of steel stocks yesterday -- at the expense of investors.

Yieh Loong shares fell NT$0.60, or 7 percent, to close at NT$8 while China Steel, the nation's largest steelmaker, fell NT$0.40, or 2 percent, to NT$19.4.

The Taiwan Stock Exchange also reclassified the Yieh Loong stock as "requiring full delivery," which means that investors won't be able to buy any of the firm's shares using borrowed money in so-called margin trading -- as of tomorrow.

Lin Wen-lang also expressed concerns over potential irregularities behind the bounced-check incident. He said it is unlikely for the steelmaker, which is expected to make NT$4.6 billion in revenues this year, to bounce a check as small as NT$49 million.

The lawmaker urged the Ministry of Finance to launch an investigation into the incident.

In response, Vice Finance Minister Sam Wang (王得山) said his ministry will soon look into the company's financial statements and produce a report within a week.

According to local media reports, a group of domestic banks led by Chiao Tung Bank (交銀) has agreed to continue offering funds to Yieh Loong.

But the steelmaker needs to communicate with the banking unit that bounced its check on Tuesday -- the Metropolitan Bank & Trust Company's Taipei Branch (菲律賓首都銀行). The firm owes the bank a total of NT$90 million.

The media reports said Yieh Loong is expected to allocate NT$500 million out of its profits this year in order to pay back syndicate bankloans of NT$18 billion.

The steelmaker is reportedly also considering negotiating with the banks to lower the interest rate on its syndicate loan. If the interest rate is lowered, Yieh Loong will be able to save NT$250 million in interest payments next year, the reports said.

Despite Yieh Loong's financial debacle, SinoPac Securities Corp (建華證券) said in its research report yesterday that it is still bullish about the nation's steel industry and Yieh Loong's performance next year -- it cited rising demand and higher prices in the global market.

Meanwhile, Lin Wen-yuan (林文淵), newly appointed chairman of China Steel, which owns 39.3 percent of Yieh Loong -- worth NT$1.13 billion -- shrugged off market concerns over its re-investment company's financial performance, saying that China Steel won't sit back and watch Yieh Loong's financial problems deteriorate.

Lin Wen-yuan added that Yieh Loong has had no problem paying back debts since it began turning a profit after last year's losses of NT$1.9 billion.

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