Plans to restructure the finances of the debt-ridden Taiwan High Speed Rail Corp (THSRC) face more challenges following a setback in lawsuits involving preferred stock at the Taiwan High Court on Tuesday, former minister of Transportation and Communications Yeh Kuang-shih (葉匡時) said yesterday.
Yeh resigned in January after the financial restructuring plan — jointly proposed by the Ministry of Transportation and Communications and THSRC — failed to secure approval from lawmakers.
Yeh said in a radio interview that there are only two ways to address the deteriorating financial state of THSRC and the lawsuits: Either THSRC proposes a new financial plan or the government takes over the system.
“We might still have had a chance to salvage the company if the plan was passed at the legislature last year. The challenges will only increase if the financial problem is left unsolved. Shareholders suffer more losses, which subsequently increases the risk for the government to take over the system. Nobody is a winner in this case,” Yeh said.
Yeh indicated that the lawsuits on the preferred stock would soon be finalized, and that the court should still rule in favor of the preferred stock holders.
Because of the loss in court, the accounting firm auditing the company’s financial statement would list the ordered payment from the court as debt.
The previous financial restructuring plan was criticized by lawmakers as benefiting certain financial groups. The high-speed rail operator then proposed selling stock to investors affiliated with the government.
However, Yeh said that the proposal cannot guarantee that the government would still control the company’s board of directors.
“Whichever party is in power next year should not solve the problem by asking government-affiliated banks to simply write off these loans they gave to THSRC,” he said.
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