Taiwan Fertilizer (
The latest twist to the Taifertilizer saga involves its purchase of shares in Zanadau Development Corporation (新瑞都), which is currently developing a 11.66 hectare commercial zone in Kaohsiung.
According to the Ministry of Economic Affair's Commission of National Corporations (CNC) Taifertilizer bought NT$700 million worth of shares in Zanadau at an average price of NT$10.75, without informing the commission first.
As the ministry is Taifertilizer's largest shareholder with a more than 40 percent stake, the CNC still has control of the company and therefore its approval for such a purchase should have been sought.
The commission also questioned the financial health of Zanadau. According to the CNC, Zanadau's annual sales from operating the commercial zone is estimated at only NT$3.5 billion to NT$4.3 billion. That is not enough to pay the company's loans and its expenses.
In addition, the commission thought Taifertilizer's NT$700 million investment is too large. That figure accounts for one tenth of Taifertilizer's total capitalization and one tenth of Zanadau's total capital.
Kuo Yau (郭耀), president of Taifertilizer, said yesterday that the corporation's investment in Zanadu was instigated by former chairman Hsieh Sheng Fu (謝生富). Kuo said Hsieh gave the company only three days to assess Zanadau, then the investment was passed by the board of directors very quickly.
According to Zanadau, the company has over 500 shareholders and Taifertilizer is just one of them -- and Taifertilizer made the investment because of Zanadau's good prospects. There is absolutely no cross-holding between the two companies.
Taifertilizer's woes began on Oct. 12, when it was revealed that it had allegedly lent NT$4 billion to four affiliate companies, set up following its privatization on Sept. 2, so those affiliates could buy stock in Taiwan Fertilizer.
The Ministry of Economic Affairs responded the next day by dismissing Hsieh as well as the five board directors and three supervisors appointed by the MOEA.
In the four days following the dismissals, Taiwan Fertilizer's share price tumbled by the seven percent limit, from NT$67.5 to NT$51.5 last Saturday.
The company's announcement at its provisional board meeting on Monday that it would pay a dividend of NT$4.70 sent its stock soaring by the seven percent limit to NT$55.
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