Taiwan High Speed Rail Corp (THSRC, 台灣高鐵) yesterday signed the nation’s biggest-ever syndicated loan of NT$382 billion (US$11.98 billion), organized by a bank consortium led by the Bank of Taiwan (BOT, 台灣銀行).
The new refinancing package included THSRC’s first-round syndicated loans of NT$308.3 billion, which is guaranteed by the Ministry of Transportation and Communications, and a separate loan of NT$73.7 billion with the company’s assets as collateral, a statement from THSRC said.
“This is the largest syndicated loan in Taiwan’s history,” Bank of Taiwan chairwoman Susan Chang (張秀蓮) told the signing ceremony yesterday, adding that an ad-hoc mechanism would be set up to examine the company’s financial conditions twice a year.
Chang said that a floating interest rate would be adopted for the syndicated loans, under which a lower rate will apply in the early period before increasing gradually.
The rail operator hopes that the syndicated loan package will help alleviate its financial burden that has been caused by high interest rate payments, depreciation and amortization, the statement said.
“The high-speed rail was a ‘cross-century’ construction project, which has significantly reduced travel time between the north and south in the nation since it began operations in 2007,” Minister of Transportation and Communications Mao Chi-kuo (毛治國) said yesterday.
“However, because of the heavy burden of interest rate payments and depreciation, the company has seen operating losses,” he said, adding that the new financing deal would allow it to extend its payback period.
Mao said that considering the company’s future cash flow and the financial pressure it might face in the early period of operations, a floating interest rate would apply to the loans.
THSRC has accumulated more than NT$70 billion in losses since it began offering services on Jan. 5, 2007, Chang and Mao said.
Amid the recent economic recovery and under the management of THSRC chairman Ou Chin-der (歐晉德), the railway’s passenger volume has seen steady growth, Mao said.
“We feel confident that the refinancing of the loans will improve the operator’s financial conditions,” he said.
“When the THSRC turns a profit, we will consider applying to list the company’s shares on the stock exchange to let the public enjoy the fruitful results,” Mao said.
Ou said that the high-speed rail’s passenger capacity on weekends had exceeded 10,000 for 15 straight months, adding that the company would speed up construction of train stations in Miaoli, Changhua and Yunlin counties and provide passengers with a safe and comfortable environment.
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