Cash-strapped Far Eastern Air Transport Corp (FAT, 遠東航空) could finalize its NT$5 billion (US$164.3 million) recapitalization plan as early as next week if the board of Kinmen Kaoliang Liquor Inc (金酒公司) agrees to inject NT$2.2 billion, or NT$1 per share, for a fully-diluted 40 percent controlling stake, executives of both companies said yesterday.
However, the liquor company, which is owned by the county government, laid out two deal-breakers: if it failed to secure either a controlling stake or rights to appoint new management at FAT, including its chairman, president and chief financial officer, Kinmen Liquor chairwoman Joanna Lei (雷倩) said yesterday in a telephone interview.
“FAT has long been an underfunded company, but its financial crisis could be solved immediately with our proposed capital injection,” Lei said, adding that the company had conducted a risk assessment before Thursday’s board meeting.
The deal is still pending final approval from the Kinmen County Council, which is slated to review the liquor company’s financial assessment reports early next week before voting on the local government’s reinvestment plan next Thursday.
Kinmen Liquor’s reinvestment proposal aims to keep FAT flights between Taipei and the outlying island from being discontinued to prevent transportation problems for Kinmen residents.
Extending the airline’s warmest welcome, FAT spokesman Hanson Chang (張有朋) yesterday said the company was grateful for the capital injection plan proposed by Kinmen Liquor, which in late February became the first company to express willingness to bail the airliner out of debt.
“We look forward to facilitating the recapitalization deal,” he said.
However, Chang said Kinmen Liquor was not the only interested suitor, since several other firms, including foreign investors, had expressed an interest in taking up a controlling stake in the carrier.
“We will carefully coordinate among potential investors to complete the private replacement deal,” he said.
The likelihood of a foreign investor taking up a controlling stake on its own appears slim, as local regulations limit foreign investors to stakes of less than 25 percent in local airliners, while no more than 49 percent of a local airline’s shares can be sold to foreign investors.
Chang said Far Eastern Group (遠東集團) chairman Douglas Hsu (徐旭東) had also expressed an interest in a 15 percent stake in FAT after dilution.
Far Eastern Group, the biggest shareholder in FAT with a 15.22 percent stake, may have to spend another NT$300 million to remain a shareholder with a diluted 15 percent stake.
A market insider speaking on condition of anonymity yesterday lauded the airline’s success in attracting new capital, but said that there was some risk involved for potential investors, as the airline had not disclosed all the details of its financial situation or the size of its debts.
The airline is also planning to reduce capital soon after its recapitalization has been completed, which may cut the value of Kinmen Liquor’s reinvestment from NT$2.2 billion to around NT$1 billion immediately, the source said, urging the airline to beef up its future competitiveness and profitability.
RUN IT BACK: A succesful first project working with hyperscalers to design chips encouraged MediaTek to start a second project, aiming to hit stride in 2028 MediaTek Inc (聯發科), the world’s biggest smartphone chip supplier, yesterday said it is engaging a second hyperscaler to help design artificial intelligence (AI) accelerators used in data centers following a similar project expected to generate revenue streams soon. The first AI accelerator project is to bring in US$1 billion revenue next year and several billion US dollars more in 2027, MediaTek chief executive officer Rick Tsai (蔡力行) told a virtual investor conference yesterday. The second AI accelerator project is expected to contribute to revenue beginning in 2028, Tsai said. MediaTek yesterday raised its revenue forecast for the global AI accelerator used
TEMPORARY TRUCE: China has made concessions to ease rare earth trade controls, among others, while Washington holds fire on a 100% tariff on all Chinese goods China is effectively suspending implementation of additional export controls on rare earth metals and terminating investigations targeting US companies in the semiconductor supply chain, the White House announced. The White House on Saturday issued a fact sheet outlining some details of the trade pact agreed to earlier in the week by US President Donald Trump and Chinese President Xi Jinping (習近平) that aimed to ease tensions between the world’s two largest economies. Under the deal, China is to issue general licenses valid for exports of rare earths, gallium, germanium, antimony and graphite “for the benefit of US end users and their suppliers
Dutch chipmaker Nexperia BV’s China unit yesterday said that it had established sufficient inventories of finished goods and works-in-progress, and that its supply chain remained secure and stable after its parent halted wafer supplies. The Dutch company suspended supplies of wafers to its Chinese assembly plant a week ago, calling it “a direct consequence of the local management’s recent failure to comply with the agreed contractual payment terms,” Reuters reported on Friday last week. Its China unit called Nexperia’s suspension “unilateral” and “extremely irresponsible,” adding that the Dutch parent’s claim about contractual payment was “misleading and highly deceptive,” according to a statement
The Chinese government has issued guidance requiring new data center projects that have received any state funds to only use domestically made artificial intelligence (AI) chips, two sources familiar with the matter told Reuters. In recent weeks, Chinese regulatory authorities have ordered such data centers that are less than 30 percent complete to remove all installed foreign chips, or cancel plans to purchase them, while projects in a more advanced stage would be decided on a case-by-case basis, the sources said. The move could represent one of China’s most aggressive steps yet to eliminate foreign technology from its critical infrastructure amid a
RSS