THSR financial plan OK’d by legislative committee

2015/05/25

A restructuring bill aimed at getting the finances of Taiwan High Speed Rail Corp. back on track was approved May 21 by the transportation committee of the ROC Legislature.

Under the legislation, THSR will reduce its capital by 60 percent to cover accumulated losses before increasing capital by NT$30 billion (US$978.79 million).

The capital injection comprises NT$24.2 billion from THSR-Related Construction Fund and NT$5.8 billion from government-backed shareholders.

After restructuring, direct government investment will account for 48.9 percent of total THSR shares, with another 15 percent coming from government-backed entities. The current top five private investors are to hold 17.4 percent of shares, down from 37.4 percent.

In addition, the law will extend the company’s charter by 35 years to 2068, with a provision requiring legislative approval before it can roll out fare rises.

No floor review of the bill is necessary and it will pass through the Legislature during the current session. But since the Statute for Encouragement of Private Participation in Transportation Infrastructure Projects stipulates government ownership should not exceed 20 percent of THSR, the legislation must be amended before the restructuring can take effect.

A source familiar with the matter said THSR will convene a board meeting next month to discuss the plan, which is expected to be approved at an extraordinary shareholder meeting scheduled for August.

“If everything goes as planned, the capital reduction is expected to take place in October, with new funding set to be in place during the first quarter of next year”

The source added that THSR is expected to implement fare cuts in December at the earliest, bringing down the cost of a one-way Taipei-Kaohsiung ticket from NT$1,630 to NT$1,490.

Source: Taiwan Today (http://taiwantoday.tw/ct.asp?xItem=230675&ctNode=413)