Shares of TransAsia soar on business restructuring hopes

Shares of closing mid-sized carrier TranAsia Airways staged a strong rebound Monday, stopping 13 straight sessions of the 10 percent maximum decline, as investors have embraced high hopes that Far Eastern Air Transport Corp. (????) will step in to help the financially troubled TransAsia restructure its business, dealers said.

TransAsia shares rose 10 percent to close at NT$1.08 (US$0.03) with 33.33 million shares changing hands on the Taiwan Stock Exchange, where the weighted index ended down 0.94 percent at 9,239.32 points. After the solid rebound, there were still orders placed by investors to buy an additional 1.13 million TransAsia shares.

Since TransAsia announced a closure of its business without advance warning Nov. 22, its shares on the local main board had fallen almost 81 percent before Monday's solid rebound.

The stock opened higher and momentum accelerated in the mid-morning session on the business restructuring hopes, to push up its share price to the day's high, up 10 percent. The strength continued until the end of the session, the dealers said.

Buying interest in the stock emerged after Far Eastern Air, another regional carrier in Taiwan, expressed interest last week, saying it is willing to help TransAsia restructure its business. Far Eastern Air intends to enter negotiations with TransAsia's bank creditors for the future business restructuring by preparing itself to provide assistance to the troubled carrier.

However, bank creditors led by Mega International Commercial Bank (???) seemed uninterested in Far Eastern Air's plan, and has repeatedly asked TransAsia to dispose of its planes to repay its loans.

TransAsia posted a net loss of NT$2.22 billion and a loss per share of NT$3.42 in the first nine months of 2016. Its gross margin during that period was minus 18.76 percent. In addition, the carrier has shouldered about NT$11 billion in debt with Mega Bank, its largest creditor.

Commenting on Far Eastern Air's plan to help TransAsia restructure its business, Financial Supervisory Commission Chairman Lee Ruey-tsang (???) said that he will be glad to see the business restructuring plan succeed. Lee added that the Civil Aeronautics Administration (CAA) is dealing with the flight rights previously owned by TransAsia, while the FSC, the top financial regulator in Taiwan, will provide assistance on the matter if necessary.

The CAA has rescinded all of TransAsia's flight rights and has asked China Airlines (??), one of the country's leading international carriers, to take over the flights temporarily until the government reallocates the flight rights after the Lunar New Year holiday, which will end Feb. 1.

The TWSE has scheduled a meeting for Tuesday to discuss the possibility of a delisting of TransAsia shares, as the carrier has been denied any loan extensions by its creditor banks.

Source: Focus Taiwan News Channel