State-run banks yesterday declined to extend the deadline for Ching Fu Shipbuilding Co (慶富造船) to meet its repayment obligations, raising the prospect that the company’s contract to build six minesweepers for the navy would soon be terminated.
Termination of the contract could lead to NT$14.9 billion (US$496.57 million) in bad debts for state-run banks that participated in a syndicated loan to the troubled shipbuilder, the Ministry of Finance said.
The shipbuilder has also secured other questionable loans, such as a separate build-operate-transfer contract for a National Museum of Marine Biology and Aquarium project, bringing banks’ total exposure to the shipbuilder to about NT$20.51 billion, of which more than 70 percent is expected to be unrecoverable, the Financial Supervisory Commission said.
Photo: Fang Pin-chao, Taipei Times
Newly installed First Commercial Bank (第一銀行) chairman Ray Dawn (董瑞斌) and Bank of Taiwan chairman Joseph Lyu (呂桔誠) told the legislature’s Finance Committee that they would not allow an extension for Ching Fu to furnish a NT$7.9 billion advance payment bond as stipulated by its contract with the Ministry of National Defense.
The advanced payment bond is due on Friday, and the NT$35.85 billion minesweeper contract would be automatically terminated should Ching Fu Shipbuilding fail to provide the payment by Friday next week.
In light of Ching Fu’s financial troubles, the two state-run banks have ruled out preserving the contract, Lyu and Dawn said during a question-and-answer session at the legislature.
The shipbuilder has already missed a payment due last month, putting it in breach of contract, Lyu and Dawn said, adding that the company has not been making the required interest payments.
First Bank, which served as lead bank in the syndicated loan, will no longer help the shipbuilder salvage its project, Lyu said.
The Bank of Taiwan will vote against granting an extension as Ching Fu has yet to submit the required information, making it impossible for the bank and other lenders to verify its financial condition, Dawn said.
While a formal meeting with participating banks in the syndicated loan is to take place today, other lenders are expected to follow First Commercial Bank’s decision to cut its losses.
Separately, the Coast Guard Administration (CGA) on Sunday terminated its contract with Ching Fu as the shipbuilder has continued to fall behind in delivering 28 patrol boats and demanded NT$1.2 billion in compensation.
Ching Fu in May 2013 won a CGA tender to build 28 100-tonne patrol boats, and has completed and delivered 13 so far.
The CGA said the shipbuilder failed to meet Sunday’s deadline for delivery of the 14th boat after missing several deadlines earlier.
Ching Fu Shipbuilding chairman Chen Ching- nan (陳慶男) declined to answer reporters’ questions on his way to report to a police station in Kaohsiung, as he is required to do daily.
Chen was arrested in August and released on bail of NT$8 million in the case of suspected loan fraud linked to the minesweeper contract.
Additional reporting by CNA
GET TO SAFETY: Authorities were scrambling to evacuate nearly 700 people in Hualien County to prepare for overflow from a natural dam formed by a previous typhoon Typhoon Podul yesterday intensified and accelerated as it neared Taiwan, with the impact expected to be felt overnight, the Central Weather Administration (CWA) said, while the Directorate-General of Personnel Administration announced that schools and government offices in most areas of southern and eastern Taiwan would be closed today. The affected regions are Tainan, Kaohsiung and Chiayi City, and Yunlin, Chiayi, Pingtung, Hualien and Taitung counties, as well as the outlying Penghu County. As of 10pm last night, the storm was about 370km east-southeast of Taitung County, moving west-northwest at 27kph, CWA data showed. With a radius of 120km, Podul is carrying maximum sustained
Tropical Storm Podul strengthened into a typhoon at 8pm yesterday, the Central Weather Administration (CWA) said, with a sea warning to be issued late last night or early this morning. As of 8pm, the typhoon was 1,020km east of Oluanpi (鵝鑾鼻), Taiwan’s southernmost tip, moving west at 23kph. The storm carried maximum sustained winds of 119kph and gusts reaching 155kph, the CWA said. Based on the tropical storm’s trajectory, a land warning could be issued any time from midday today, it added. CWA forecaster Chang Chun-yao (張竣堯) said Podul is a fast-moving storm that is forecast to bring its heaviest rainfall and strongest
TRAJECTORY: The severe tropical storm is predicted to be closest to Taiwan on Wednesday and Thursday, and would influence the nation to varying degrees, a forecaster said The Central Weather Administration (CWA) yesterday said it would likely issue a sea warning for Tropical Storm Podul tomorrow morning and a land warning that evening at the earliest. CWA forecaster Lin Ting-yi (林定宜) said the severe tropical storm is predicted to be closest to Taiwan on Wednesday and Thursday. As of 2pm yesterday, the storm was moving west at 21kph and packing sustained winds of 108kph and gusts of up to 136.8kph, the CWA said. Lin said that the tropical storm was about 1,710km east of Oluanpi (鵝鑾鼻), Taiwan’s southernmost tip, with two possible trajectories over the next one
President William Lai (賴清德) yesterday criticized the nuclear energy referendum scheduled for Saturday next week, saying that holding the plebiscite before the government can conduct safety evaluations is a denial of the public’s right to make informed decisions. Lai, who is also the chairman of the Democratic Progressive Party (DPP), made the comments at the party’s Central Standing Committee meeting at its headquarters in Taipei. ‘NO’ “I will go to the ballot box on Saturday next week to cast a ‘no’ vote, as we all should do,” he said as he called on the public to reject the proposition to reactivate the decommissioned