The Ministry of Transportation and Communications yesterday proposed first reducing Taiwan High Speed Rail Corp’s (THSRC, 台灣高鐵) capital by at least 60 percent through preferrred stock redemption and later raising it by NT$30 billion (US$3 billion) to help the railway operator avoid bankruptcy, with the concession period being extended by up to 75 years.
Speaking before the legislature’s Transportation Committee, ministry officials said that as of the end of last year, the high-speed rail operator’s liabilities totaled NT$457.5 billion, including NT$364.4 billion in loans. It had accumulated losses of NT$52.2 billion.
The company will be mired in debt for the next five years if it does not undergo financial restructuring, the ministry said.
Photo: Chang Chia-ming, Taipei Times
THSRC will have to generate an annual revenue of NT$40 billion to NT$75 billion to cover the costs of amortization, and repay loans and finance construction of new rail stations in Miaoli, Yunlin, Changhwa and Nangang (南港), it said.
The company will not be able to afford these costs with its current annual revenue, nor would it be able to do so even after factoring in revenue growth of 6.2 percent per year, it said.
The company had issued preferred shares valued at NT$40.2 billion during the construction of the high-speed rail system. The stakeholders — mainly banks — had filed lawsuits demanding redemption of the shares or payment of interest.
With two of the stakeholders winning the lawsuits in the first trial, the ministry is concerned that other stakeholders would follow suit.
Minister of Transportation and Communications Yeh Kuang-shih (葉匡時) said the ministry would present a comprehensive financial restructuring plan by the end of next month.
Based on the current plan drawn up by the ministry, the company’s capital must be reduced by at least 60 percent via preferred share redemptions, adding that the company will have to raise an additional NT$30 billion in capital after the capital reduction is completed.
The concession period, in which THSRC holds the exclusive right to operate the high-speed rail system, would be extended from 35 years to 65 to 75 years.
“We have examined cases around the world and found that 35 years might be too short,” Yeh said.
“The company that manages and operates the Channel Tunnel between the UK and France, for example, was first awarded a concession of 55 years, but it was later extended to 99 years. I am afraid that 99 years might be deemed too long by some people here, but we could consider extending the concession for THSRC by another 30 to 40 years,” the minister added.
Yeh said THSRC’s initial investors would be banned from investing further in the company when it seeks recapitalization, but it would be open to companies wholly or partially owned by the government.
The government would control the seats on the company’s board of directors after completing the procedure.
THSRC chairman Tony Fan (范志強) said the company aims to raise NT$50.5 billion to buy back its preferred shares and pay dividends in order to settle its accounts with the banks once and for all, and avoid collective lawsuits filed against the company.
The ministry’s proposal drew mixed reactions.
Democratic Progressive Party (DPP) Legislator Tsai Chi-chang (蔡其昌) said the company should lower ticket prices after solving its financial problems.
DPP Legislator Yeh Yi-jin (葉宜津) opposed the extension of the concession period. Apart from the financial restructuring plan, she asked the ministry to submit a feasibility study on turning THSRC into a state-owned firm.
Chinese Nationalist Party (KMT) Legislator Lo Shu-lei (羅淑蕾) said the company should not rely on raising ticket prices to increase its revenue, but should explore other revenue sources and save on overheads.
NO HUMAN ERROR: After the incident, the Coast Guard Administration said it would obtain uncrewed aerial vehicles and vessels to boost its detection capacity Authorities would improve border control to prevent unlawful entry into Taiwan’s waters and safeguard national security, the Mainland Affairs Council (MAC) said yesterday after a Chinese man reached the nation’s coast on an inflatable boat, saying he “defected to freedom.” The man was found on a rubber boat when he was about to set foot on Taiwan at the estuary of Houkeng River (後坑溪) near Taiping Borough (太平) in New Taipei City’s Linkou District (林口), authorities said. The Coast Guard Administration’s (CGA) northern branch said it received a report at 6:30am yesterday morning from the New Taipei City Fire Department about a
IN BEIJING’S FAVOR: A China Coast Guard spokesperson said that the Chinese maritime police would continue to carry out law enforcement activities in waters it claims The Philippines withdrew its coast guard vessel from a South China Sea shoal that has recently been at the center of tensions with Beijing. BRP Teresa Magbanua “was compelled to return to port” from Sabina Shoal (Xianbin Shoal, 仙濱暗沙) due to bad weather, depleted supplies and the need to evacuate personnel requiring medical care, the Philippine Coast Guard (PCG) spokesman Jay Tarriela said yesterday in a post on X. The Philippine vessel “will be in tiptop shape to resume her mission” after it has been resupplied and repaired, Philippine Executive Secretary Lucas Bersamin, who heads the nation’s maritime council, said
CHINA POLICY: At the seventh US-EU Dialogue on China, the two sides issued strong support for Taiwan and condemned China’s actions in the South China Sea The US and EU issued a joint statement on Wednesday supporting Taiwan’s international participation, notably omitting the “one China” policy in a departure from previous similar statements, following high-level talks on China and the Indo-Pacific region. The statement also urged China to show restraint in the Taiwan Strait. US Deputy Secretary of State Kurt Campbell and European External Action Service Secretary-General Stefano Sannino cochaired the seventh US-EU Dialogue on China and the sixth US-EU Indo-Pacific Consultations from Monday to Tuesday. Since the Indo-Pacific consultations were launched in 2021, references to the “one China” policy have appeared in every statement apart from the
More than 500 people on Saturday marched in New York in support of Taiwan’s entry to the UN, significantly more people than previous years. The march, coinciding with the ongoing 79th session of the UN General Assembly, comes close on the heels of growing international discourse regarding the meaning of UN Resolution 2758. Resolution 2758, adopted by the UN General Assembly in 1971, recognizes the People’s Republic of China (PRC) as the “only lawful representative of China.” It resulted in the Republic of China (ROC) losing its seat at the UN to the PRC. Taiwan has since been excluded from