Taiwan's FAT seeks new investor to save it from creditors

Singapore
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Financially troubled Taiwanese carrier Far Eastern Air Transport (FAT) is trying to find a large investor to recapitalise its debt-laden business before the expiry of its court-sanctioned reprieve from creditors.

A Taiwanese court on 22 February granted the airline 90 days of protection from creditors, says an FAT spokesman in Taipei who declines to say how much debt the airline is in. He insists that its assets still outweigh its debts by about NT$3 billion ($96 million).

Taiwan’s Central News Agency says the carrier reported debts of NT$9.99 billion ($315 million) as of the end of September 2007.

FAT’s spokesman says that on 22 February the airline sold its 6% stake in TransAsia Airways, another Taiwanese carrier. These shares were sold to a trading company that then on-sold the shares so “we don’t know” who ultimately bought them, says the spokesman.

FAT also owns 5% of a smaller Taiwanese carrier called Daily Air which operates Dornier 228s, but the spokesman says FAT has no plans to sell these shares.

It also has no plans to sell any aircraft, says the spokesman, adding that its fleet comprises five Boeing 757 passenger aircraft, one Boeing 757 freighter and nine Boeing MD-80-series aircraft. According to Flight’s ACAS database FAT owns all the 757 passenger aircraft and nearly half of the MD-80s. The 757 freighter is on lease from AWAS.

The spokesman says the carrier plans to solve its financial problem by seeking a cash injection.

“We need to find a new investor or investment group within one month,” says the spokesman, adding that in this year’s second half the airline might also call on existing shareholders to inject funds into the business.

FAT started operations in 1957 and its current shareholders include Taiwanese transportation, retail and construction giant Far Eastern Group with 15%, Malaysian travel agency group Bajia with nearly 10%, Taiwan’s China Airlines with around 6%, China Development Industrial Bank with 8%, and China Development Financial Holding with 8%.

Bajia bought its stake about two years ago from US insurance and investment giant AIG, he adds.

FAT in the past couple of years has faced increased competition in the Taiwanese domestic market from high-speed trains.