State-run Mega International Commercial Bank (兆豐銀行) yesterday inked a syndicated loan agreement with Formosa Industries Corp (台灣興業), a unit of the Formosa Plastics Group (FPG, 台塑集團), aimed at deepening the latter’s business in Vietnam.
The banking subsidiary of Mega Financial Holding Co (兆豐金控) will act as the lead bank in the loan, with Japan’s Sumitomo Mitsui Banking Corp, Mizuho Bank and Bank of Tokyo-Mitsubishi UFJ also participating in the syndicated loan valued at US$210 million (NT$6.31 billion), Mega Bank said in a statement.
All parties involved signed the agreement in Vietnam’s Dong Nai Province, where the headquarters office of Formosa Industries is located, the statement said.
The move marks the first business expansion by a Taiwanese firm in Vietnam since violent anti-China protests erupted there earlier this year, damaging multiple foreign companies’ facilities, including some Taiwanese ones.
Formosa Industries manufactures polystyrene used in home appliances and electronics in the Southeast Asian country and the FPG has invested up to US$1.3 billion to expand its manufacturing capacity there since 2001, Mega Bank’s statement said.
Demand for the material is strong as more downstream companies move to ASEAN countries for their lower labor costs and fast economic growth, it added
Formosa Industries plans to strengthen its capacity with an extra US$250 million and the benefits of this investment are expected to become evident later this year and the next, the statement said.
In the statement, the manufacturer said it had applied for a loan of US$157 million, but the banks decided to give it more given the FPG’s healthy credit history, the statement said.