Sat, Jul 31, 2004 - Page 10 News List

CPC, Taiwan Power face revamps for share sales

GOVERNMENT HOLDINGS The new leadership at three state-run firms have one goal in common -- shaping up their companies so that Taipei can sell its stake

BLOOMBERG

Chinese Petroleum Corp (CPC, 中油) president Chen Bao-lang (陳寶郎), who took over the helm of the nation's biggest refiner on Thursday, said helping put the state-owned company into private hands is one of his main objectives.

Chen's promotion was the third change at the top of a state-owned company in a week. The government may be hoping that management changes will help remove obstacles that have slowed stake sales in the past. It needs money to help plug a a record NT$257 billion (US$7.5 billion) budget deficit.

"They are at a disadvantage," Kevin Yang, vice president of International Investment Trust Co (國際投信), who manages the equivalent of US$90 million, said of state-owned companies. "They have to serve government policies and don't consider making profit their ultimate goals. They must be privatized to be competitive. The main barriers are objections from law-makers and labor unions."

Also on the block are Taiwan Power Co (Taipower, 台電), where Lin Ching-chi (林清吉), took over as chairman on Tuesday, and Taiwan Sugar Corp, where Lin Neng-pai (林能白) assumed the chairmanship the same day.

The asset sales are focused on the government's 65 percent stake in Chunghwa Telecom Co (中華 電信); its 97 percent stake in Taiwan Power and its 100 percent holding in Chinese Petroleum.

The government may be hoping for more success than it's had with Chunghwa. Plans to sell two-thirds of the company foundered when investors shunned the government's asking price at four auctions.

The Commission of National Corporations suggested in 2002 that the government sell at least part of CPC at NT$19 a share. That would be 32 times CPC's earnings last year. CPC, with net assets of NT$268 billion, posted an earnings-per-share (EPS) of NT$0.59 last year. Taiwan Power, with assets of N$523 billion, had an EPS of NT$0.73.

Competitors in private ownership show better performances.

A CPC internal study said it should pare its workforce to 11,000 from 15,400, company spokesman Liao Tsang- long (廖滄龍) said in an interview.

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