Prince Motors receives loan reprieve

Prince Motors Co (太子汽車), a small automaker that sells Isuzu and Suzuki-branded vehicles, said yesterday that operations were normal as its creditor banks had agreed to a two-year grace period to repay its bank loans totaling NT$20 billion (US$604.8 million).

The car manufacturer's creditors were worried its bank loans could become outstanding debts, as the company had insufficient collateral.

The Hsinchu-based carmaker had offered shares of its parent company, Cosmos Bank (萬泰銀行), as collateral based on its book value of NT$10 per share.

However, Cosmos shares plunged to their daily limit over the past few days after the bank signed agreements with investors, including SAC Private Capital Group LLC and General Electric Co, to sell a majority stake for NT$29.7 billion, or about NT$2 per share.

Cosmos shares closed at NT$3.1 yesterday on the Taiwan Stock Exchange. The securities regulator said last week that the stock was banned from margin trading effective Sept. 5.

To ease creditor banks' jitters, Prince Motors emphasized that the company was making profits and was capable of repaying its loans as it owns a substantial number of assets in commercial areas in Taipei City and County.

Prince Motors said its market share had climbed to 8 percent this month, ranking it No. 4 in the local auto market thanks to strong demand for its new Suzuki cars.