A Taiwan High Speed Rail Corp (THSRC, 台灣高鐵) shareholders’ meeting passed a government-backed financial restructuring plan yesterday, which includes cuts to ticket prices.
The meeting’s agenda listed eight resolutions to be put to the vote, seven of them directly related to the financial restructuring plan. They included extending the concession period for the high-speed rail by 35 years, reducing the company’s capital by 60 percent and raising NT$30 billion (US$913 million) from government-affiliated shareholders.
Each resolution passed with margin of between 70 and 90 percent, mainly because most shares are controlled by government-affiliated agencies and the original investors.
Photo: CNA
THSRC chairman Victor Liu (劉維琪) thanked the shareholders for deciding to look at the big picture by supporting the financial restructuring plan. He said that the plan would substantially improve the company’s financial situation, allowing it to hire more people and install new facilities.
Liu also said that the adjusted ticket pricing scheme would now be reviewed by the Bureau of High Speed Rail.
Based on a resolution passed by the legislature, the company should lower its ticket prices as part of the financial restructuring plan. The cost of a ticket from Taipei to Zuoying (左營) should be cut from NT$1,630 to NT$1,490.
Despite the plan garnering the support of a majority of shareholders, some of the smaller shareholders remained dissatisfied that the company’s capital is to be reduced by 60 percent, meaning that they are being forced to accept a loss on their investment.
Shareholder Chen Ming-hsiu (陳明修) said that while 40 percent of the company’s capital came from small shareholders, they did not get dividends and were forced to bear the company’s losses.
Another small shareholder questioned whether the board had followed procedures stipulated in the Company Act (公司法) when it decided to pass the financial restructuring plan. In response, Liu said that the company had consulted attorneys to ensure that the board reached a valid decision and had followed the correct legal procedures.
Fubon Financial Holding Co (富邦金控) chairman Daniel Tsai (蔡明忠), one of THSRC’s original investors, said in an interview with the Chinese-language United Daily News that the plan, once implemented, would turn THSRC into a state-owned company operated by a private contractor.
Tsai said that he supported the financial restructuring plan on the grounds that it would make the company financially stable.
He said some shareholders might think that reducing the company’s capital by 60 percent was too much, but extending the concession period by 35 years would help his firm redeem its investment in THSRC.
The Bureau of High Speed Rail said that the company is scheduled to start reducing its capital next month, adding that the company’s amended contract with the government would take effect simultaneously.
The bureau said that the company had previously sought arbitration over disputed government charges, but that it must withdraw the arbitration within 15 days of the amended contract taking effect.
The bureau said that the company is then planning to start raising NT$30 billion in December. The High Speed Rail-Related Construction Fund is to invest NT$24.2 billion in the company, while other government-affiliated shareholders plan to invest NT$5.8 billion.
THSRC must pay a dividend to the holders of preferred stock before Feb. 8 next year, the bureau added.
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