CTBC Bank says Uni-President’s stake sale will not materially affect recovery of Fuwei loan

CTBC Bank says the planned sale of Sunwell shares by Uni-President Group companies will not materially change lenders’ ability to recover money from a troubled offshore-wind project.

Uni-President Co. and Yongwei Technology decided on Aug. 31 to participate in an offer from Hu Cheng-chieh by selling all their Sunwell holdings for NT$0.05 per share. The move prompted speculation that the group was trying to sever its financial ties with Sunwell and avoid responsibility for a syndicated loan linked to Sunwell subsidiary Fuwei Energy.

CTBC, the lead arranging bank, said the loan’s outstanding balance is NT$6.09 billion. Its own participation totals NT$608 million, or 9.98 percent. The original syndicated facility exceeded NT$20 billion and included eight state-owned banks, including Bank of Taiwan, as well as private lenders such as Taipei Fubon Bank and SinoPac Bank.

The bank said the loan terms required Sunwell to act as a joint guarantor, but Uni-President and Yongwei did not provide joint guarantees. The lending group therefore could not originally seek repayment from those two companies. Sunwell is now insolvent, meaning the banks already faced difficulty recovering money from the guarantor, CTBC said.

Fuwei Energy took on Taiwan Power’s second offshore-wind project, but major cost increases produced heavy losses at parent company Sunwell. Taiwan Power has refused to add to the budget, according to the report. CTBC said lenders will continue negotiating with Fuwei and Taiwan Power to reduce overall credit risk. One participating bank said it had required Sunwell to provide a deposit guarantee and currently holds deposits roughly equal to its debt, although the conditions imposed by each bank differ.

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The public tender offer has no material impact on the syndicated banks’ recovery.