Youth Camp asked state for aid: memo

The debt-ridden Youth Camp Health Group (佳姿健康集團) last month tried to ask the government for financial assistance but failed, according to an internal company document obtained by the Taipei Times yesterday.

The 10-page document also showed that Youth Camp had tried to approach potential buyers such as Being Sport fitness center (伊士邦), Nice Group (耐斯), Tien Lai spring resort (天籟溫泉會館) and Maidenform Taiwan Ltd (媚登峰) to bail it out.

Youth Camp chairwoman Pure Tsai (蔡純真) announced on Tuesday that the fitness-center chain is suspending business at all its branches, with the exception of the premium Taipei 101 Oxy Gym.

Tsai yesterday confirmed that the company is negotiating with a potential buyer to rescue the 29-year-old firm, although rumors circulated that she might also shut down the Taipei 101 Oxy Gym.

But she declined to elaborate on how Youth Group will be sold -- partially or as a whole.

"We'll issue a joint statement tomorrow [Thursday]," she said, denying that the buyer is President Being Corp (統一佳佳) or Alexander Health Club (亞力山大俱樂部), two fitness-center chains that were tipped to take over Youth Camp.

According to the internal document, which was addressed to the Democratic Progressive Party (DPP) government last month, Youth Camp claimed that some pro-unification Chinese-language media had maliciously reported on the company's finances since late February.

Youth Camp is known for its close ties with the pan-green alliance. Tsai's lawyer husband Fan Jen-yu (樊仁裕) is a national policy adviser to President Chen Shui-bian (陳水扁).

The group's financial crisis erupted in late February when checks worth tens of millions of NT dollars bounced and payment of salaries for 600 employees was delayed.

The company accused its rivals of working with the media to produce bad news at the critical point at which Youth Camp tried to raise capital.

"A long report published in the United Daily News (聯合報) on Feb. 27 led to banks freezing their lending and deterred potential investors from approaching us," it said.

The company had tried to apply for loans of NT$100 million (US$3.2 million) from five local banks -- First Commercial Bank (第一銀行), Taiwan Cooperative Bank (合作金庫), Lank Bank of Taiwan (土地銀行), Bank of Overseas Chinese (華僑銀行) and Chiao Tung Bank (交通銀行) -- to date without success.

Youth Camp's debt currently stands at NT$1.3 billion, including bank loans of NT$760 million, according to the document.

Ker Chien-ming (柯建銘), executive director of the DPP's Central Policy Committee, said yesterday that he had no knowledge of Tsai approaching the government for help.

The document listed the slow office-leasing process in the Taipei 101 skyscraper as the main reason behind Youth Camp's worsening financial situation.

The occupancy rate at the world's tallest building is at about 35 percent, far below the 70 percent that was projected for the end of last year.

"Because of the slow office leasing, there are fewer people moving about in the building ... but huge investments and operational costs have placed a heavy burden on Youth Camp," the document said.

The company signed a 15-year lease with Taipei Financial Center Corp (台北金融大樓公司), owner of the Taipei 101 building, in August 2003.

In response to Youth Camp's criticism, Michael Liu (劉家豪), assistant vice president of Taipei Financial Center, said tenants should conduct market surveys before signing leases.