Taiwan High Speed Rail Corp’s (THSRC) new financial restructuring plan is to be reviewed at a meeting of the Legislative Yuan’s Transportation Committee tomorrow, with the majority of Chinese Nationalist Party (KMT) lawmakers supporting a version proposed by the Ministry of Transportation and Communications.
The only difference between the financial restructuring plan proposed by THSRC and the one by the ministry is that the company wants to raise NT$30 billion (US$979.1 million) after reducing its capital by 60 percent to erase debts, with 64 percent of the funds being raised through public fundraising.
The ministry proposed two ways to raise the same amount of money.
The first plan would allow state-run agencies to increase their investment in the firm by NT$18 billion.
The company’s employees would be able to invest NT$1.2 billion and the public could buy shares valued at a total of NT$10.8 billion.
The second plan would raise funds from state-run and state-affiliated agencies only.
The ministry has said it prefers the second plan.
Bureau of High Speed Rail Director-General Allen Hu (胡湘麟) said that most KMT legislators found the second plan more acceptable, because the government could control more than 60 percent of the shares in THSRC, making it a company owned by the state, but operated by the private sector.
However, Hu said that a number of KMT lawmakers remained dissatisfied that the five original shareholders would still hold a 17.4 percent stake if the financial restructuring plan is implemented.
According to Hu, the shares held by the five original shareholders should be reduced to less than 10 percent, the lawmakers said.
Aside from raising capital, the company’s concession period would be extended by 35 years in both the THSRC’s and ministry’s versions of the restructuring plan.
The Democratic Progressive Party (DPP) has yet to express its position on the issue.
However, DPP Legislator Yeh Yi-jin (葉宜津) has said that she believes ticket pricing should not be changed, because a high-speed rail ticket in Taiwan is far cheaper than one in other Asian countries where high-speed rail services are available.
Instead of allowing THSRC to operate for an additional 35 years after the concession period expires, Yeh said that the company only needs an extension of 15 years.
At the end of last year, THSRC had accumulated losses of NT$46.7 billion, the company said. It also has to pay about NT$10.1 billion in preferred stock dividends.
According to the firm, some preferred stockholders have succeeded in getting courts to side with them in two lawsuits to redeem share capital valued at NT$8.2 billion.
The company said it only has NT$1.3 billion in cash and would not be able to pay preferred stockholders once the verdicts are finalized.
In an audit of THSRC last year, accountants warned investors about the company’s pending lawsuits with holders of preferred stock, which could constitute a major infringement of terms in the company’s contract with the government.
As such, the government could also terminate the contract with the company before the concession period expires, they said.
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