Far Eastern Textile seeks loan for China expansion

Far Eastern Textile seeks loan for China expansion

Far Eastern Textile Ltd., Taiwan's largest fabrics company, is seeking US$128.5 million of loans to expand in China, the island's biggest export market, said a banker involved in the transaction.

Far Eastern is borrowing US$58.5 million in dollars and yuan to boost yarn production in Wuxi, eastern China. It's seeking US$70 million to build a new factory in Suzhou, northwest of Shanghai, to make materials used in safety belts, the banker said. DBS Group Holdings Ltd. and HSBC Holdings Plc are arranging the deal.

Taiwanese companies have shifted more than 40 percent of their production overseas, mostly to China, Taiwan President Chen Shui-bian said January 1. The country's businesses are lured by China's cheaper labor costs and to get closer to clients in the world's fastest growing major economy.

Far Eastern will pay interest of 0.85 percentage point over the London interbank offered rate for the US$30 million portion of the Wuxi loan. The Suzhou loan has an interest margin of 0.8 percentage point over Libor. The five-year loans can be extended to seven years, said the banker, who declined to be named.

The 230.5 million yuan (US$28.5 million) part of the Wuxi credit has a margin of 10 percent less than the People's Bank of China's lending rate, the banker said.

Three-month Libor, an average of rates set daily by banks and used as a borrowing benchmark, is 4.6 percent. The PBOC lending rate is at 5.85 percent for three to five years.

DBS and HSBC are inviting other lenders to join the credit by February 9, said the banker.

Far Eastern Textile reported 23 percent profit growth in the first nine months of 2005 to NT$6.52 billion (US$204 million).

China considers the island a renegade province that must be reunited with the mainland, by force if necessary.

Updated : 2021-04-12 09:44 GMT+08:00