TransAsia Airways Corp’s (復興航空) creditor banks yesterday expressed their hope that the 65-year-old airline would restructure its finances instead of dissolving the company.
Financial Supervisory Commission data showed that domestic banks have NT$11.06 billion (US$346.93 million) in exposure from TransAsia, which on Tuesday announced plans to dissolve its operations to curb losses.
State-run Taiwan Cooperative Bank (TCB, 合庫銀行), lead bank of a syndicated loan to the airline, said restructuring would be a more favorable option, as lenders would not need to find buyers for collateral assets.
TransAsia owes TCB and other banks NT$4 billion from a 2011 syndicated loan of NT$5.5 billion to acquire two aircraft, TCB spokesman Davis Hu (胡光華) said.
“I am afraid there is little else we can do other than foreclose on the airplanes if TransAsia insists on bowing out and defaults on its debt,” Hsu said by telephone after a meeting of creditor banks.
TCB contributed NT$1.6 billion to the syndicated loan and lent a further NT$400 million for a separate aircraft purchase, Hu said.
TCB, the nation’s largest lender by outlets, would have to raise provisions for loans to TransAsia, which could dampen earnings, despite holding sufficient collateral, Hu said, adding that creditor banks have been left to watch the drama unfold.
Mega International Commercial Bank (兆豐銀行), another state-run lender, unequivocally said that it prefers restructuring to dissolution and would convey that message in separate discussions with TransAsia.
TransAsia had owed NT$1.7 billion to Mega Bank, which reduced the amount to NT$1.59 billion by confiscating the airline’s deposits, said a Mega Bank official said by telephone, who spoke on condition of anonymity.
“The best-case scenario would be for TransAsia to find a buyer and inject new capital,” the official said, adding that consolidation would not be impossible, as other domestic airlines are interested in routes TransAsia operated.
Mega Bank is to incur US$16 million in impaired asset losses for acquiring convertible bonds issued by TransAsia in 2013, which the airline has said the lender would be unable to redeem on their maturity on Tuesday next week.
“The chance for recovery [of the bond investment] is slim, due to the absence of collateral,” the official said.
Mega Bank said that it would hold talks with the airline on its debt today.
In 2013, TransAsia issued US$75 million in convertible bonds in a bid to shore up its finances.
TransAsia’s creditors for other loans include Cathay United Bank (國泰世華銀行), Chang Hwa Commercial Bank (彰化銀行), Hua Nan Commercial Bank (華南銀行), Bank of Taiwan (臺灣銀行) and Yuanta Commercial Bank (元大銀行).
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