Taiwan High Speed Rail Corp (THSRC, 台灣高鐵) shares jumped 47 percent on the Emerging Stock Market to close at NT$5 yesterday on reports the government could take over the debt-ridden company or dominate a board reshuffle.
THSRC shares picked up NT$1.6 from NT$3.4 on Friday, after Premier Wu Den-yih (吳敦義) confirmed on Sunday that chairwoman Nita Ing’s (殷琪) would step down.
No company spokesperson could be reached for comments on a reported extraordinary board meeting today to set the agenda for a board reshuffle.
Eric Lai (賴建承), an analyst at Marbo Securities Consultant Co (萬寶證券投顧), said reports of a government takeover led to optimism that the financial troubles plaguing the nation’s first build-for-transfer project could soon be over.
Government officials, however, denied any takeover plan later yesterday.
Lai said THSRC shares will enter correction in coming days as the drama unfolds.
“I don’t believe the government will sit around watching THSRC collapse,” Lai said by telephone. “The company’s stocks will prove worthy after the dust settles.”
The company, which has more than NT$70 billion (US$2.16 billion) in accumulated losses, or 67 percent of its capital, is seeking a syndicated loan of NT$390 billion.
The banks have suggested THSRC raise between NT$10 billion and NT$20 billion in new capital — in addition to seeking bank loans — to improve its finances. THSRC has resisted the idea, saying that high depreciation costs would scare away investors.
THSRC spokesman Ted Chia (賈先德) said in earlier interviews it would be more realistic if banks agreed to lower interest rates and the government allowed a longer depreciation period.
Chia said improving ticket revenue and declining losses justified lower default risks and interest rates.
Susan Chang (張秀蓮), chairwoman of the Bank of Taiwan (臺灣銀行), told the Central News Agency yesterday that the government-owned lender would lend its support for the syndicated loan.
Chang said the bank would help facilitate the loan approval to prevent the matter from disrupting normal operations at the company. The bullet train plays a key role in north-south transportation, she said.
Norman Yin (殷乃平), a money and banking professor at National Chengchih University, said the bank group would likely bail out the company at the government’s request if the government was reluctant to do so itself.
Yin, a former lawmaker, said the government should consider taking over THSRC without compensation and address legal barriers to solve the thorny issue once and for all.
“A board reshuffle may prove no remedy as the company is expected to remain in the red for quite a while,” Yin said by telephone.
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