TAIPEI (CNA) – Lending extended by banks registered in Taiwan to two financially troubled companies – flat panel maker Chunghwa Picture Tubes Ltd. and multi-crystalline solar wafer supplier Green Energy Technology Inc. – reached NT$16.9 billion (US$548 million), according to the Financial Supervisory Commission (FSC).
Data compiled by the FSC’s Banking Bureau showed a total of 14 Taiwanese banks extended loans to the two companies, and out of the NT$16.9 billion in loans, 67 percent or NT$11.4 billion was secured loans and the remainder was unsecured loans as of the end of November.
Nonetheless, the Banking Bureau said the 14 banks which lent to the two financially struggling firms are fundamentally sound. According to the bureau, as of the end of October, these banks raked in NT$9.7 billion in pretax profit on average and there are no worries regarding their capability to bear the risks.
Chunghwa Picture Tubes and Green Energy, both of which are under the corporate umbrella of conglomerate Tatung Co., surprised the market by announcing on Thursday plans to seek bankruptcy protection or debt restructuring.
FSC Chairman Wellington Koo (顧立雄) told the press that the financial troubles of the two companies are expected to affect the parent Tatung to some extent, but that there are no signs that the troubles have sent ripples through other industries in Taiwan.
On Friday, shares of Chunghwa Picture Tubes fell 10 percent, the maximum daily decline, to close at NT$1.17 per share.
Shares of Green Energy also shed 10 percent to end at NT$5.52 per share in the local equity market, where the benchmark weighted index closed down 0.86 percent at 9,774.16 points.
In addition to lingering caution toward trade tensions between the United States and China, market analysts said the two firms stirred up worries over corporate earnings after the financial troubles involving Chunghwa Picture Tubes and Green Energy surfaced.
Chunghwa Picture Tubes, a manufacturer of small and medium-sized flat panels, said that its board had approved a plan to seek bankruptcy protection due to a global supply glut.
It said the ongoing Washington-Beijing trade disputes have also contributed to lower prices for screens due to shrinking global demand, which makes it unlikely that the company and its fully owned subsidiary Chunghwa Picture Tubes (Bermuda) Ltd. will be able to repay their debts. According to Chunghwa Picture Tubes, it has NT$34.8 billion in total debt.
In the first nine months of the year, Chunghwa Picture Tubes reported NT$0.93 in loss per share (LPS), compared with NT$0.47 in earnings per share over the same period of last year.
Currently, Chunghwa Picture Tubes runs a 4.5th and a 6th generation plant with a total workforce of 4,450 in Taiwan. The company said the financial restructuring is aimed at protecting the rights of its employees, debtors and shareholders.
Meanwhile, Green Energy said it will apply for debt restructuring. As of the end of the third quarter, Green Energy’s total debt was NT$11.43 billion.
In the first three quarters of the year, Green Energy posted NT$7.77 in LPS, after registering NT$1.72 in LPS over the same period of last year.
In September, Green Energy laid off 203 workers at the Southern Taiwan Science Park, which reportedly was about 20 percent its total workforce.
By Tien Yu-pin and Frances Huang