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Asia Pacific chairman Lai quits

The chairman of debt-ridden telecom operator Asia Pacific Telecom Co (亞太電信), Springfield Lai (賴春田), resigned yesterday as his plans for a major turnaround ran into strong opposition from the board.

The board is scheduled to meet next Tuesday to elect a new chairman.

To increase its chances of attracting capital from overseas partners including Japan's KDDI Corp, Asia Pacific's board agreed to the acquisition of local Internet phone company Atech System Integrated Co (安大資訊) last week.

But the telecom company's majority shareholder, the Ministry of Transportation and Communications (MOTC), blocked the acquisition plan yesterday.

The Ministry cited inappropriate timing.

The ministry has six representatives on the board via the Taiwan Railway Administration (TRA, 台鐵) which owns a 16 percent stake in Asia Pacific.

"The acquisition will cost us tens of million dollars, but it will give us much-needed talent to build a high-speed WiMAX network and to bid for the license [next year] as well as bring in interested investors," Lai told a press briefing yesterday following the board meeting.

Asia Pacific had intended to purchase Atech through a share swap via Internet service subsidiary Asia Pacific Online Services Inc (亞太線上).

The two companies had agreed that Atech shareholders would exchange one of their shares for 1.8 shares of Asia Pacific Online.

Lai has said Asia Pacific needs a WIMAX license if it is to survive. This would allow the company to compete with local players that already offer faster 3.5-generation Internet connections to computer users.

KDDI, which obtained one of two WiMAX licenses issued by the Japanese government last week, had intended to spend between NT$5 billion (US$150 million) and NT$10 billion to subscribe to new shares issued by Asia Pacific.

These would have allowed the Japanese company to own a 10 percent to 20 percent share of Asia Pacific, Lai said.

"I don't think they will fulfill the plan," he said.

In March, the government appointed Lai to chair Asia Pacific after placing the telecom company in receivership.

Two other potential investors were also likely to withdraw their investment plans, Lai said.

He declined to disclose the names of the companies.

In October, Asia Pacific shareholders approved a proposal to axe 50 percent of its capital at NT$65.68 billion to write off massive losses as well as selling new shares in an attempt to raise NT$20 billion.

Asia Pacific posted NT$43 billion in losses for 2006 after former major shareholder Rebar Asia Pacific Group (力霸亞太企業集團) embezzled most of the corporate fund.

Amid the swirling speculation about Lai's departure, Huang Chien-ming (黃千明), who represents retail shareholders on the board, said he strongly suspected that the MOTC wanted to replace Lai.

He cited Lai's refusal to withdraw a construction bid for a government project to build a commercial complex in Taipei's Wanhua district.

"Rather than opposition to the purchase of Atech, the Wanhua project is probably the main catalyst behind the MOTC's determination to replace Lai," Huang said. "It has made repeated attempts to block the deal."

He added that Asia Pacific had a great chance of winning the construction bid.

Huang said that he was asking shareholders to sign a petition tapping Lai to represent retail investors on the board.
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