The builder of the rail link to connect CKS International Airport to Taipei City yesterday accepted the government's terms, agreeing to secure a paid-in capital of NT$55 billion on its own -- 25 percent of the project's NT$220 billion in total cost.
The project's total cost includes NT$100 billion slated for the construction and NT$120 billion for land acquisition.
"After 13 rounds of negotiation to resolve all disagreements, Ever Transit International Co (長生國際開發) retains its priority right as the project's winner," said Wu Fu-hsiang (吳福祥), deputy director general of the Bureau of Taiwan High Speed Rail under the Ministry of Transportation and Communications when holding a news conference to announce the final draft's completion.
Wu added that Ever Transit is required to raise its paid-in capital from the current NT$2.6 billion to NT$5 billion, establish a chartered company to manage its financial plan and acquire financial support from banks by Dec. 31 when both parties officially ink the contract.
When the rail link's construction begins at the end of next year, Ever Transit will have to further raise its paid-in capital to NT$25 billion and secure a syndicated loan of NT$75 billion, another deputy director general of the bureau, Pang Jar-hua (龐家驊), said at the news conference.
Pang, however, said that Ever Transit will soon provide the bureau with its plan for allocating the remaining paid-in capital of NT$30 billion for the project's land acquisition, which is budgeted at NT$120 billion, since the cash-strapped company has decided not to acquire use of more than 1,000 hectares at a time.
"In order to carry on the project, Ever Transit will acquire land use in separate phases as an alternative to alleviate financial difficulties," said Roger Sun (孫麟), Ever Transit's executive vice president, coming up with an estimate of NT$30 billion for the first phase of land acquisition.
Indicating that Ever Transit's financial plan is "a little too optimistic," Pang added that the bureau will do its best to help finance the project although the builder will have to negotiate with banks on the loan's interest rate itself.
While accepting the government's terms yesterday, Sun expressed regret that the government had failed to understand the private sector's financing difficulties and requested such a high amount of paid-in capital.
He added that, on average, 27 percent of owners of land on the link's the route favor taking compensation in cash rather than alternative land parcels. This compares with 4 to 5 percent for previous projects which will be a burden on the company's cash flow.
Sun, nevertheless, vowed to find new investors and convince them of the project's optimistic outlook as the company's 21 shareholders had previously agreed to raise capital to NT$8 billion by the year's end and to NT25 billion by next year's end, which is only enough for the actual construction of the link.
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