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Wei Chuan shares soar after Ting Hsin repays loan

Wei Chuan shares soar after Ting Hsin repays loan

Taipei, Jan. 23 (CNA) Shares of Wei Chuan Foods Corp. (??) moved sharply higher Friday after its beleaguered parent company, Ting Hsin International Group, repaid an overdue loan for the group's property development unit, in which Wei Chuan has a 51 percent stake, dealers said. The loan repayment reduced the financial pressure under which Wei Chuan has been operating, leading investors to see the stock as a bargain after its steep decline in recent months due to food scandals involving the food company and other Ting Hsin units, they said. As of 12:24 p.m., shares of Wei Chuan had risen 7 percent, the maximum daily increase, to NT$26.15 (US$0.83), with 4.01 million shares changing hands. Led by Wei Chuan, the food sub-index was up 1.59 percent at 1,236.42, while the weighted index on the Taiwan Stock Exchange was up 0.87 percent at 9,451.33. Wei Chuan shares attracted strong buying soon after the local bourse opened in the wake of Ting Hsin's announcement on Thursday that it had repaid the loan. The momentum accelerated, helping the stock hit the 7 percent upward ceiling as bargain hunters turned active, dealers said. Dealers said there were orders for 60 million Wei Chuan shares that remained unfilled after the stock reached the 7 percent upper limit. On Thursday, Ting Hsin said it had repaid the balance due of NT$6.5 billion on a syndicated loan made to its property unit, Ting Lu Development Co. by a bank consortium led by Mega International Commercial Bank. Ting Lu issued a promissory note worth NT$7 billion to secure the syndicated loan in May 2013 and used land located in New Taipei's Sanchong District as collateral. Ting Lu repaid NT$500 million out of the NT$7 billion loan but failed to pay back the balance by the deadline of Dec. 31, 2014. The failure prompted the creditor banks to take action earlier this month, and the Taipei District Court ruled in their favor by granting a provisional attachment of the Sanchong land to protect their rights. Ting Hsin has been financially squeezed since it was embroiled in an edible oil scandal in October, in which several of its subsidiaries were found to be making their oils with ingredients not fit for human consumption. The scandal led the bank consortium to demand repayment of the balance of the loan by the deadline rather that refinance the loan, which it had been considering. Analysts said that with the loan now having been repaid, Wei Chuan will no longer be under time pressure to find a buyer willing to pay a good price for the land that was previously seized by Ting Lu's creditors. Now under less financial pressure, the food company is expected to devote more of its efforts to developing its core business and improving its operations. (By Han Ting-ting and Frances Huang)


Updated : 2021-09-17 08:59 GMT+08:00