Taiwan High Speed Rail Corp (THSRC) chairman Victor Liu (劉維琪) yesterday said a new financial restructuring plan would give members of the public priority in investing in the company, dismissing speculation that only large corporations would benefit from the plan.
Liu called for lawmakers to cooperate to resolve the financial crisis facing the high-speed rail system.
“This government has it within its administrative power to extend the concession period and amend the terms in the contract with the THSRC, but the Legislative Yuan says it has the right to oversee the operation of the high-speed rail system. In that case, the legislators should act responsibly and finish what it has started,” Liu said. “They cannot keep postponing the task and do nothing about it, because this might hurt their chances to get re-elected, which is not good for the country.”
Liu made the statement in an interview with radio host Tang Hsiang-long (唐湘龍).
The legislature’s Transportation Committee is scheduled to review the company’s new financial restructuring plan next week.
Earlier this year, lawmakers across party lines unanimously rejected the financial restructuring plan proposed by the THSRC and the Ministry of Transportation and Communications. Former transportation and communications minister Yeh Kuang-shih (葉匡時) and former THSRC chairman Tony Fan (范志強) both resigned soon after the plan failed to secure approval from the Legislative Yuan.
Liu said the company made a few changes based on the opinions of the legislators. Instead of raising capital from banks or from preferred stockholders first, he said the public would now have priority in buying the company’s shares.
If the company then needs to raise more capital to meet the NT$30 billion (US$957.5 million) goal, Liu would then seek investment from current shareholders, preferred stockholders or the four large government funds. He said that raising capital this way would ensure that the government has more seats on the company’s board.
Liu said that the company’s current share price is NT$4.4 per share, adding that it would rise to NT$10 per share once the company reduces its capital to clear its debt.
Meanwhile, the banks are to allow the company to tap into a cash fund after the new financial restructuring plan is approved at the legislature, with the fund currently acting as collateral for loans.
The fund, Liu said, would help the company upgrade its facilities, such as its ticketing system.
Liu also said that the reduction of capital did not affect the preferred stockholders, which are agencies affiliated with the government. He said that it is unfair to blame the original investors for the financial problems that the company is now dealing with.
According to Liu, the original investors only bid for three contracts for the rail system’s construction. The gross margin of their investment was about 15 percent. The reduction of capital would cause them to lose between NT$14 billion and NT$15 billion.
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