First International Telecom (Fitel), a PHS mobile telecom service operator and a WiMAX licensee, failed recently to honor checks worth NT$86 million (US$2.7 million). Its financial woes are likely to continue to swell if the company fails to raise fresh capital through a planned private placement, according to the company and market sources.
Although the company has made part payments for checks bounced recently, Fitel is obligated to pay over NT$100 million in debts before the end of this month, according to company chairman Charlie Wu.
Fitel now owes NT$3.5 billion in bank loans, with interest payments reaching NT$15 million per month, the company said. In addition, Fitel also owes a payment of NT$40 million, including operating license fees and spectrum utilization fees, to the National Communications Commission (NCC).
Fitel currently generates revenues of about NT$350 million a month, but net cash flow totals around NT$20 million which is barely enough to pay its interest payments and operating expenses, said Fitel.
To tide over its financial difficulties, Fitel hopes it can fulfill its plans to raise NT$1 billion of new capital via an issuance of 200 million preferred shares before the end of this month, Wu noted.
FIC Global, one of the major shareholders of Fitel, is reportedly likely to take up a 17% share of the planned private placement. However, the Sinn Kong Group, another major shareholder, has not yet decided to join the capital increment project.
In other news, the Chinese-language Commercial Times cited data from Fitel as indicating that Fitel has accumulated total losses of NT$3.08 billion as of June this year.
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