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Yamay seeks to avoid foreclosure

"The board has authorized the company's management to launch negotiations with our debtors and come up with a repayment plan by next Sunday [Sept. 14] ... The board has also made maintaining the park's operations a top priority while reducing its operating costs."

Luke Tan, Yamay vice president

Yamay International Development Corp (月眉開發), which runs the Mala Bay (馬拉灣) recreational theme park in Taichung County, held a provisional board meeting yesterday to discuss its NT$7.7 billion debts and proposed repayment plan.

"The board has authorized the company's management to launch negotiations with our creditors and come up with a repayment plan by next Sunday [Sept. 14]," Yamay vice president Luke Tan (譚元凱) said yesterday.

"The board has also made maintaining the park's operations a top priority while reducing its operating costs," he said.

Yamay opened the Mala Bay theme park in July 2000. But the nation's economic downturn over the last three years contributed to the company's financial difficulties.

Since January, Yamay has defaulted on its syndicated NT$6.9 billion loan from 21 banks, including First Commercial Bank Ltd (第一銀行) and Chang Hwa Commercial Bank (彰化銀行), which had previously threatened to foreclose on the mortgage.

"If Yamay's repayment plan can earn the support of the majority of banks, no legal action will be taken," said a corporate lending manager, surnamed Wang, at First Commercial yesterday.

Wang added that he expects Yamay to come up with a repayment schedule soon.

Yamay also owes NT$290 million in royalty fees and land rentals to the Taiwan Sugar Corp (Taisugar, 台糖). The state-run company agreed to give Yamay a grace period -- it must pay its debts to Taisugar before Oct. 9 or the company will reclaim the land.

According to Chinese-language media reports, Taisugar chairman Wu Nai-jen (吳乃仁) reached a consensus with Yamay to reduce the land rental by NT$50 million a year and reclaim two-thirds of the leased land left unused by Yamay.

Taisugar leased a total of 200 hectares to Yamay, which has only made use of 40 hectares, Tan said.

Tan said the company also hopes to convince Taisugar to lower the 5.2 percent-a-year royalty payments -- a proposal to which Wu has reportedly given his preliminary consent -- in order to reduce Yamay's operating costs.

As of last month, Mala Bay had generated NT$540 million in revenues, far lower than expected due to the SARS epidemic. But the company expects the park's revenues to reach NT$800 million next year.

Yamay has also made great efforts to solicit new investors, including China Steel Corp (中鋼), to inject capital into the company, Tan said.

But he denied reports that China Steel may take over the park's operations, saying the steelmaker would be only "one of the many potential investors."

A China Steel public relations official yesterday quoted chairman Lin Wen-yuan (林文淵) as saying that the company is assessing whether Yamay is worth of investing in.

"We'll look into the park's future prospects and its current financial condition before reaching a decision," said the official, who refused to be identified.

Two of the company's biggest shareholders -- Yao Hua Glass Co (耀華玻璃) and the Cabinet's Development Fund (開發基金) -- have decided not to inject more money into the company.

The fund has invested a total of NT$400 million into the theme park.
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