Taiwan High Speed Rail Corp (THSRC) would face a bigger crisis if it resorts to arbitration over some of the disputed charges with the government before activating its proposed financial restructuring plan, chairman Victor Liu (劉維琪) said yesterday.
Backed by the Ministry of Transportation and Communications, the company’s proposed financial restructuring plan finally secured legislative support on May 22 after suffering two major setbacks earlier in the year.
The plan was made official on July 27 through an amendment to the contract signed with the ministry, which made the government the company’s largest shareholder.
Despite the backing of the government, the plan still needs to be approved by the company’s shareholders before it can take effect and a special shareholders’ meeting has been scheduled for tomorrow.
The company plans to cancel arbitration sessions over the disputed charges, in which it is seeking restitution of NT$390 billion (US$11.8 billion) if its shareholders approve the restructuring plan.
A glitch has emerged after some of the small shareholders ran newspaper advertisements urging other small shareholders to reject the restructuring plan tomorrow. They want the company to go through arbitration over the disputed charges before the restructuring plan is put to a vote.
However, Liu said that seeking arbitration first would not put the company in the most advantageous position, given the uncertainty over when the arbitration process would end and its outcome.
“If the government or the company dislikes the result, either one can choose to reject the arbitration results and fight in court instead,” Liu said. “Should we fail to abide by the time [for financial conditions] stipulated by the law, the company’s book value would turn negative, and its stock would become wallpaper. The company does not have enough cash flow to pay back its bank loans.”
The restructuring plan would extend THSRC’s concession period by 35 years, but the concession would not be extended if the firm seeks arbitration first, he said.
Without an extension of the concession period, THSRC has no way pay the NT$20 billion or so per year it owes on the loans, which would violate the company’s contract with the government and mean the government could take over the firm, he said.
THSRC shareholders should support the restructuring plan because it would minimize their losses by only reducing the capital by 60 percent, rather than 90 percent, Liu said.
Small shareholders would still have a chance to recoup their investment if the shares are publicly traded, he said.
In related news, THSRC is to launch a new train schedule on Dec. 1 after three new stations become operational.
The new additions mean that a train that stops at every station on the line would make a 138 minute journey, 18 minutes longer than at present.
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