Investors give billions to THSRC

Taiwan High Speed Rail Corp (THSRC, 高鐵) yesterday said that it had raised between NT$25 billion and NT$30 billion from a NT$50 billion offering of preferred stock.

"The economic outlook has made it difficult for the company to sell the stock," THSRC chairwoman Nita Ing (殷琪) told the media yesterday.

Ing to reveal who bought the stock, saying the company will announce the details of the deal at an event scheduled for Monday next week.

Last year, THSRC, which is building the nation's first north-south high-speed railway, decided to pay a 5 percent dividend on the preferred shares as part of the company's plan to increase capital by NT$18.4 billion.

Unlike stock, which is sold to individual investors or mutual funds with no performance guarantees, preferred stock is issued to a designated group of investors, such as banks, insurers and venture capital companies, with a fixed yearly dividend.

According to the company's spokesperson, Arthur Chiang (江金山), THSRC will continue seeking investors for the remaining NT$20 billion worth of shares, which it hopes to sell by the end of this year.

The company's five largest shareholders may also inject more capital, including an expected NT$1 billion from Continental Engineering Corp (大陸工程) and another NT$1 billion to NT$1.5 billion from Fubon Insurance Co (富邦產險), Chiang said.

Along Continental and Fubon, the project's three other shareholders -- Evergreen Marine Corp (長榮海運), Pacific Electric Wire & Cable Co (太平洋電線電纜) and Teco Electric & Machinery Co (東元電機) -- are required to jointly inject capital of no less than 25 percent of the project's total capital, which is expected to grow from NT$50 billion now to NT$80 billion.

Yesterday Ing vowed to stick to the schedule and have the rail system operational by October 2005.

According to THSRC president George Liu (劉國治), the company has completed 70 percent of the project's civil works and is slated to begin laying tracks in May, while the first trial run will take place near Kaohsiung early next year.

To speed up the construction, the company is expected to spend NT$130 billion this year, some of which will be spent on hiring 350 new employees to prepare for the system's future operations, Liu added yesterday.

"From now on, THSRC will have to transform itself from a construction and engineering team to a operational team," Liu told the company's 1,600 employees, one-quarter of whom are expatriates, at yesterday's celebration.

Speaking a guest, Ho Nuan-hsuan (何煖軒), director-general of the Bureau of Taiwan High Speed Rail, yesterday promised government cooperation to ensure the rail system's completion on time.

Ho said that once the project is finished, he expects the system to help boost the nation's economic development.

Chiang that the company is expected to hold a signing ceremony today to finalize contracts for bullet trains with two joint-venture companies. He did not elaborate.

Bloomberg service reported yesterday that Mitsubishi Industries Inc and six other Japanese companies had already won the US$4.48 billion contract, citing the Nihon Keizai newspaper.

The report said that the Japanese companies won an order for about ?100 billion (US$841 million) to construct railroad tracks, which are expected to be finished by December 2004, after winning orders for signals, communications, operation management and passenger information systems.