Teco Given More Than It Needs in a Syndicated Loan

Taipei, Aug. 11, 2006 (CENS)--In a recent syndicated loan, banks were willing to lend 46% more money than needed to TECO Electrical and Machinery Co., Ltd., which will use the money to finance an ambitious plan to build global presence.

The four syndicate banks—Bank of Taiwan, Taiwan Cooperative Bank, First Bank and Hua Nan Bank—were willing to lend NT$5.85 billion (US$182 million at US$1:NT$32), 46% more than the company's needs, indicative of their optimism and high expectations on TECO's future.

TECO Chairman Theodore Huang pointed out that his company will put the borrowed money mostly into major investments to produce industrial-appliances, compressors in mainland China, and into automated industrial production; while part of the capital will be used to finance its long-term operations.

The major investments are part of the company's “Seven Star” plan, which is scheduled to double the consolidated revenue for the company and its affiliates as soon as it is completed in three years. The “Stars” represent the seven rising markets in mainland China, India, Brazil, Russia, Vietnam, the Middle East and Turkey.

In line with the global-presence plan, TECO will open branches in India, the Middle East and Vietnam by the end of this year.

The compressor factory in Qingdao, mainland China is its largest-ever investment project across the Strait. TECO, China Steel Corp. (CSC) of Taiwan, and a Japanese company co-invested NT$1.8 billion (US$56 million) in the factory, which is designed to turn out four million compressors a year for the mainland's top air-conditioner supplier Haier Group and its affiliates. Pilot production will begin in the first quarter and volume production in the second quarter next year.

Huang expects the corporate revenues and earnings to steadily climb in the years to come thanks to the favorable emerging factors, including economic recovery, major domestic public-work projects being implemented, successful cost-cutting and continual market-share increases at home.

In the first half this year, TECO racked up revenues of NT$14.17 billion (US$442 million), inching up only 1% year-to-year, for which Huang remains optimistic.