Minister of Transportation and Communications Mao Chi-kuo (毛治國) yesterday called on the major shareholders of Taiwan High Speed Rail Corp (THSRC) to raise their investment in the company, saying the financial problems of the railway operator must be resolved by the end of the year.
Mao said that the ministry was helping THSRC with its financial restructuring plan and would ask the company's five major shareholders, which are listed in its contract with the government, to raise their stakes in THSRC.
The five shareholders are Evergreen Group (長榮集團), Pacific Wire and Cable Co (太平洋電線電纜), Continental Engineering Corp (大陸工程), Fubon Group (富邦集團) and TECO Group (東元集團).
“We won't let them get away [from increasing their investments] this time,” Mao said in response to a question from Chinese Nationalist Party (KMT) Legislator Liao Cheng-ching (廖正井). “We have come to a critical moment, and we will use every means possible to make them do it.”
If THSRC fails to raise the needed funds in time, Mao said that the ministry would have to handle the matter based on the conditions stated in the government's build-operate-transfer (BOT) contract with the company.
Mao faced questions from lawmakers at the legislature's Transportation Committee, where he was scheduled to brief the lawmakers about budget plans for construction projects for the high speed rail.
In the briefing, Mao said the China Aviation Development Foundation (中華航空事業發展基金會) had notified the THSRC that its NT$4.5 billion (US$136 million) loan to the company would be due next year.
THSRC will have to pay back the funds in cash and not shares, he said.
Mao said he was confident that THSRC's new financial plan would help balance the company's revenues and expenditure.
He said in a press briefing yesterday afternoon that the company had an operating deficit of NT$200 million after payment of amortized debt and interests.
The interest that THSRC has to pay each month will be a huge burden on the company in the next two years or so, he said.
Mao said the company had total loans of NT$308.3 billion, with approximately NT$210 billion coming from the government and NT$98.3 billion from local banks.
Mao said the government had proposed lowering the interest on loans borrowed from the banks from 8 percent to about 4 percent each month, but some banks had voiced doubts about the proposal.
As to the loans from the government, Mao said that the ministry still needed to work this out with THSRC.
THSRC spokesman Ted Chia (賈先德) said yesterday the company had proposed extending the period for debt payment. He added that many overseas investors had expressed an interest in investing in the company.
THSRC plans to repay the loans it owes locally and seek loans overseas, he said.
Chia added that the company planned to raise NT$20 billion from investors.
Mao said that the contract stated that the company has 35 years of exclusive rights to operate the high-speed rail and to pay the amortized debts.
Whether THSRC could get an extension on its operating contract would be subject to discussion, he said.
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