Minister of Transportation and Communications Yeh Kuang-shih (葉匡時) yesterday said that the Taiwan High Speed Rail Corp (THSRC) is likely to go bankrupt by the end of this year if it does not resolve its financial problems quickly.
Yeh made the comments at a meeting of the legislature’s Transportation Committee, where lawmakers were set to review draft amendments to the Mass Rapid Transit Act (大眾捷運法).
The THSRC board voted Tony Fan (范志強) in as its new chairman last week and named former Uni Air chairman James Jeng (鄭光遠) as chief executive.
“The chairman will be in charge of solving the financial problems, whereas the CEO will oversee the daily operation of the high-speed rail system,” Yeh said. “The company would file for bankruptcy if its financial problems are not solved by the end of this year.”
Yeh also said that the company was asked to submit within three months a proposal to improve its financial situation, including plans to reduce capital and extend its concession period.
The company has NT$105.3 billion (US$3.47 billion) in capital and accumulated losses of NT$53 billion. During construction, the company issued preferred shares valued at NT$40 billion. The losses made the company unable to pay the dividends, causing shareholders to sue for payment. With some suits successful, THSRC and the ministry are concerned regarding potential collective action from shareholders demanding dividend payment or redeeming the stocks, worsening the financial situation.
To write off the losses, shareholders must be willing to reduce the capital by 50 percent, with Yeh saying that the five original shareholders have agreed to do so.
Allen Hu (胡湘麟), acting director-general of the Bureau of High Speed Rail, said shareholders may not redeem their funds so quickly if the company can manage to reduce its capital this year.