The Bureau of High Speed Rail yesterday said that it is forming a task force to prepare for a government takeover of the high-speed rail system as soon as Taiwan High Speed Rail Corp (THSRC) declares bankruptcy.
The rail company could go bankrupt in March or April when a lawsuit filed by Continental Engineering Corp to redeem its preferred stocks, worth NT$3.5 billion (US$109.2 million), is scheduled to be handed down, with the result likely to favor the plaintiff.
The company would have no option but to file bankruptcy, as it has only NT$1.8 billion in cash and would be unable to pay the stockholder.
The Ministry of Transportation and Communications had hoped to prevent the bankruptcy by proposing a plan to restructure THSRC’s finances.
However, the plan failed to secure bipartisan support from the legislature’s Transportation Committee on Wednesday, which ruled to hold off on a review.
Minister of Transportation and Communications Yeh Kuang-shih (葉匡時) and THSRC chairman Tony Fan (范志強) tendered their resignations on Wednesday evening following the committee’s decision.
If the court rules that THSRC must pay Continental Engineering in the third trial in March and the railway operator goes bankrupt, the bureau said that it would constitute a major breach of the company’s build-operate-transfer contract with the government. THSRC would be given 80 days to address the situation.
Should the company fail to address the situation within the 80 days, the bureau said that it would revoke the company’s qualification to operate the high-speed rail system and take charge itself, which could happen in about June.
The bureau said that members of the task force would not just be doing consulting work, but would take over every aspect of the operation, including maintenance, finances and daily operations.
The ministry would also appoint a new chairperson to serve on the railway operator’s board, the bureau added.
Meanwhile, the Taiwan High-Speed Rail Workers’ Union issued a statement yesterday saying that current and future employers should negotiate with the workers’ union.
“The company is facing a turning point,” the union said.
“By law, the union has an obligation and responsibility to negotiate with the employer,” the union said.
“Should there be any change in the company’s operation, such as a merger or separation of entities, or a transfer of ownership, the employer should ensure that the employees’ work conditions and benefits remained unchanged,” the union added.
The employer cannot make any change to working conditions without the union’s consent, it said.
As of June last year, THSRC had assets valued at NT$501 billion and liabilities of NT$452.8 billion.
It had accumulated operational losses of NT$47 billion.
It is also obligated to pay dividends worth NT$48.2 billion to shareholders.
To buy back the preferred shares issued during the construction of the rail system, the company needs to raise about NT$53.3 billion.
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