Taiwan High Speed Rail Corp (THSRC, 台灣高鐵) yesterday said it would raise more than NT$21.7 billion through the sale of preferred shares within a year, and will use the proceeds for investment in the yet-to-be-built north-south high-speed railway.
Construction of the railway is scheduled to be completed in October 2005.
"Construction of the high-speed railway is getting inten-sive, requiring huge capital to support it," THSRC chairwoman Nita Ing (
With THSRC finding it difficult to raise funds for the rail project, the company has been seeking since January to sell preferred shares to raise capital in light of the attractiveness of their stable return guarantees and tax deductibility.
THSRC will sell its preferred shares to a designated group of investors including banks, trust companies and THSRC's board members.
Investors in the preferred shares are guaranteed a 9.5-percent dividend annually for the first two years, which is much more attractive than other investment instruments.
After three years, these investors have the right to change their preferred shares to common shares and will enjoy preferential tax rates, according to regulators.
If THSRC turns a profit in the future, investors can convert their preferred shares into common shares and share in THSRC's profits. Under the plan, the company will redeem the preferred shares after four years at the issue price, which is NT$9.3 per share.
The company plans to raise NT$100 billion out of NT$380 billion for the project from private investors.
So far, the company has held six rounds of fundraising, attracting NT$78.23 billion in investments, according to the company.
THSRC shares rose 2.56 percent to NT$6.7 per share yesterday at the Emerging Stock Market (
The company plans to list on the benchmark TAIEX after it completes testing of the southern track in the third quarter of next year, according to Arthur Chiang (江金山), the company's vice president of public affairs.
Ing yesterday said the company is sticking to its timetable to begin operations in October 2005. THSRC had completed 49.92 percent of the project as of September this year.
The railway will be nation's first to operate bullet trains, running at a top speed of 350kph between Taipei and Kaohsiung.
Travel time between the two cities will be 90 minutes, with some trains also stopping in Taoyuan, Hsinchu, Taichung, Chiayi and Tainan.
THSRC expects to transport 147,000 passengers per day in the first year of operation, and 330,000 per day after the service matures, said Edward Lin (
Lin added that the company expects to break even after 16 years.
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