Papermaking conglomerate YFY Inc (永豐餘控股) yesterday said that its board has approved a request that Sun Power Development and Construction Co (三寶建設) repay US$12.29 million within one-and-a-half months after convertible bonds issued by its subsidiary Giant Crystal Universal Development Inc defaulted.
YFY subscribed to US$8.5 million of convertible bonds issued by Giant Crystal, which matured on June 20 after a one-year extension, the company said yesterday in a statement filed with the Taiwan Stock Exchange.
It has requested Sun Power repay US$12.29 million of the convertible bonds before Aug. 15, including interest charged at a rate of 10 percent in the extension period, YFY said in the filing.
Sun Power has signed an agreement to pay back the debt, YFT said.
Sun Power also added one more piece of real-estate collateral for the repayment, as requested by YFY, the papermaker said.
Sun Power’s planned sale of a commercial building in Shanghai has been suspended, which caused the construction company to default on the bond, YFY said.
The default is related to a series of loan scandals involving SinoPac Financial Holdings Co (永豐金控), which is accused of extending more than NT$5 billion (US$164.3 million) in questionable loans to Sun Power.
SinoPac Financial and YFY were founded by the family of former SinoPac chairman Ho Shou-chuan (何壽川), who was detained on June 18 suspicion of violating the Securities and Exchange Act (證券交易法).
Without sufficient collateral and proper authorization, the loans transferred between shell companies owned by Sun Power and SinoPac Financial have raised questions over the group’s regulatory compliance, the Financial Supervisory Commission said.
The ongoing investigation would not affect its operations, YFY said in a statement.
Ho still serves as director of the firm’s board.
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