Taiwan High Speed Rail Corp’s (THSRC) board of directors yesterday said it had averted possible bankruptcy after reaching an agreement on a restructuring plan following a six-hour meeting on Thursday.
The rescue plan was one of the conditions set by the Ministry of Transportation and Communication for an extension of company’s concession period for amortizing its debt from 35 years to 75 years. The current concession period was due to end in 2033.
The company has accumulated losses of NT$52.2 billion (US$1.72 billion) as of the end of last year.
THSRC spokesperson William Hsu (徐宜中) said the plan could lead to cheaper tickets beginning in April, although he did not specify the range of price reductions.
THSRC officials said the company is likely to incur large capital expenditure in the coming years as it upgrades and replaces equipment.
Additional capital expenditures are set to come from the opening of four new high-speed rail stations — Nankang (南港) in Taipei and in Miaoli, Changhua and Yunlin counties, scheduled to start operations next year.
Under the financial restructuring plan, THSRC plans to first undertake a capital reduction of NT$39 billion by retiring 60 percent of its NT$65.13 billion outstanding common shares and then raise NT$30 billion in new capital.
THSRC is to reserve NT$6 billion of a planned NT$30 billion capital increase for subscription by existing shareholders and NT$1 billion for subscription by its employees.
An additional NT$13 billion is to be reserved for holders of the company’s preferred stock.
If the NT$20 billion in new shares were not fully subscribed to by the designated buyers, the company might consider the possibility of selling the shares to insurance companies.
The remaining NT$10 billion in new shares to be sold as part of the restructuring plan are set to be made available in an initial public offering in 2016, the company said.
Minister of Transportation and Communications Yeh Kuang-shih (葉匡時) said the rescue plan is aimed at allowing the government to become the company’s controlling shareholder, after which the concession period of the system might be extended, allowing for cheaper tickets.
“We hope it will be a triple-win situation for the government, the company and passengers,” he said.
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