DOI: 10.5176/2251-1997_AF17.89
Authors: Chi-kuo Mao and Kuei-hsien Yang
Abstract:
Taiwan High Speed Rail (THSR) was built and operated by a private sector under a BOT (built-operate-transfer) scheme. The tender process was launched in 1998, and the service was commenced in 2007. The project was soon found suffering from two crucial problems: (1)fare box income was far below the forecasting level, (2) highdegree of financial leverage resulted in an overburdened hugeinterest expense. With these two situations, the THSR’s BOTscheme was entangled in serious financial crisis. Since THSR has become the essential daily north-south long haul service backbone in Taiwan, it was a major and urgent challenge for the government to solve its financial crisis and to assure its smooth operations. It took more than 7 years and employed a comprehensive two-stage (short-term and long-term) strategy, the crisis was solved and the Taiwan High Speed Rail Corporation (THSRC) was successfully listed on the Taiwan Stock Exchange in 2016. We consider the resolution of THSR’s crisis could be a valuable experience to be shared with the professionals around the world.
Keywords: BOT; financial crisis; traffic forecast; financial leverage; EBITDA; interest & depreciation: two-stage strategy; refinancing; share-holding structure
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