Mon, Jan 13, 2014 - Page 3 News List

High Speed Rail to make case for 99 years concession

ARGUMENT MADE:Qualifying factors for the extension include the global financial crisis and the 921 Earthquake, the High Speed Rail Corp said

By Shelley Shan  /  Staff reporter

Representatives of the Ministry of Transportation and Communications and the Taiwan High Speed Rail Corp (THSRC) are scheduled to meet on Friday to discuss the possibility of extending the company’s concession period.

THSRC had argued that an extension from 35 years to 99 years would help ease its burden in amortizing the project’s construction costs.

THSRC has submitted a plan to the ministry to restructure its finance based on the clause of extenuating circumstances in the build-operate-transfer contract.

The high speed rail operator first encountered financial difficulties in 2009, when it had an accumulated a loss of about NT$70 billion (US$2.3 billion), which represented two-thirds of the company’s registered capital.

The government’s intervention helped the company restructure its loans and lower the interest it had to pay.

However, greater financial problems could return, with one of the company’s shareholders, China Development Industrial Bank, recently winning a lawsuit against its contractor to redeem its stock fund.

Many fear the lawsuit could motivate other shareholders to follow the suit, pushing the firm further into debt.

Aside from the issue with repayments, THSRC also said it had several other extenuating circumstances that would qualify it for an extension in the concession period, including the 921 Earthquake and a global economic downturn.

The Bureau of High Speed Rail, which is the government body supervising the company, said the extension of the concession period can become a legitimate request if the company’s shares can be traded in public and allow all investors to enjoy the profits.

The China Development Industrial Bank purchased NT$1 billion of special shares issued by the high speed rail contractor.

However, it only petitioned for a return of NT$4.89 million in capital shares and about NT$17 million on dividends.

The court ruled in favor of returning the capital stock and turned down the request to return the dividends.

Victory in the former category could motivate the bank to redeem the remaining capital shares, the bureau said.

The company had stated that the dividends of special shares would only be paid after the company generates profits.

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