State-run Taiwan Tobacco and Liquor Corp (TTL, 台灣菸酒公司) plans to list on the local stock market as early as August next year. The offering is expected to raise about NT$30 billion (US$886 million) for the nation, a company official said yesterday.
According to TTL's initial planning, the company will release 51 percent, or 1.78 billion shares, of its stock priced at NT$17.6 per share to individual investors, said Frank Lin (林讚 峰), TTL planning director.
The listing plan is in line with the company's privatization scheme, which the finance ministry has ordered it to complete by the end of next year, Lin said.
TTL is expected to submit the proposal to Taiwan Stock Exchange Corp regulators soon after Oct. 19 if the tobacco company's board approves it then, Lin said.
As it usually takes the stock exchange 10 months to review a company's initial public offering (IPO) proposal, Lin estimated that TTL will be able to trade its stock in August next year at the earliest.
TTL's shares should be tempting to investors, given the huge earnings the company reported before and since the government opened the tobacco and liquor markets to private companies in 2002, but the company's prolonged disputes with employees cast a shadow over its IPO bid.
To stay competitive, the firm needs to shrink its workforce from the current 7,000 to 6,500, but the company found it difficult to reach consensus with its employees. The union launched several demonstrations against the privatization scheme, claiming that the plan will violate their rights and profit stockholders.
"We'll try our best to communicate with them ? [Employee resistance] is the biggest factor that may slow our privatization timetable," Lin said.
Another factor that may reduce investors' interest in the company is the requirement that it must procure tobacco leaves from local farmers, which costs TTL about NT$400 million per year, Lin said.
TTL has no choice but to abide by the government policy while trying to reduce personnel and operating costs, he said.
For the first eight months of the year, TTL reported a pretax profit of NT$6.8 billion. The company said it expects pretax profit to hit NT$10 billion this year, up 20 percent from last year.
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