The Taiwan High Speed Rail Corp’s (THSRC, 台灣高鐵) latest restructuring plan drew mixed reactions at a public hearing yesterday, with some experts saying the time has yet to come to “pull the trigger.”
The hearing was held to review the firm’s plan to avoid imminent bankruptcy following a request by Democratic Progressive Party (DPP) members of the legislature’s Transportation Committee. The lawmakers demanded that the high-speed rail operator offer more financial information to justify its restructuring attempt. Transport industry experts also attended the hearing.
Former deputy minister of transportation and communications Hochen Tan (賀陳旦) said that the plan was proposed because some preferred stockholders wanted to redeem their shares, but they have since withdrawn their request after negotiations.
He said it is like the company is shouting “there is a fire,” but he believes that its financial problems “should not be difficult to solve if they are worked out through cross-departmental negotiations.”
“The time is yet to come to pull the trigger,” he added.
Hochen said the government should hold a series of public hearings to discuss the company’s financial problems, including dealing with the preferred stockholders, the possibility of a government takeover and extension of the concession period.
Tamkang University professor Chang Sheng-hsiung (張勝雄) said that the company should shoulder its own investment risks, adding that laws regulating build-operate-transfer (BOT) projects would become useless if the government unilaterally extends the concession period.
He added that the government should resolve THSRC’s financial problems based on the terms of the contract it signed with the company.
National Taiwan University professor Jason Chang (張學孔) said that the restructuring plan is viable as the company plans to carry it out in three stages.
However, the THSRC should not be turned into a state-run firm after the plan is enforced, he said.
In response, Minister of Transportation and Communications Yeh Kuang-shih (葉匡時) said that the nation’s high-speed rail has set a set a bad example for BOT projects because of excessive government intervention in the railway’s construction and its operation.
“Of course we keep putting the issue on the backburner, but the dividends that the company promised to give to the preferred stockholders will only continue increasing if we keep discussing the issue for three to six months. The longer we wait, the more difficult it will be to solve the problem,” Yeh said.
Yeh also clarified his previous statement, in which he said that he would resign if any of the five original investors increases their investment later.
“Based on the Company Act (公司法), they are eligible to raise their stakes in the company. We can only dissuade them from doing so. I would resign if I fail to persuade them not to raise their investment in the company,” Yeh said, adding that he is willing to put everything on the line because he believes that the financial restructuring plan is moving in the right direction.
THSRC’s board of directors last month approved a restructuring plan hammered out during negotiations between the ministry, the bureau and the company that would see the firm buy back NT$39.2 billion (US$1,28 billion) in preferred stock, reduce its capital by NT$39.1 billion and then later increase the capital by NT$30 billion, while its concession period would be extended from 35 years to 75 years.
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