China Builder Said to Seek Loan for Possible Contract
China Railway Construction Corp. (1186) is seeking a $100 million to $200 million loan from Chinese banks for a property development in Nevada, a precondition for it to win a contract to build part of the project, said three people with direct knowledge of the matter.
The funding is being sought for the $1.6 billion Union Village project in Henderson City, said the people, who asked not to be identified because the discussions are private. China Railway Construction may alternatively invest a similar amount of its own money in the project, the people said.
Wonderful Sky Financial Group Holdings Ltd. (1260), which handles media relations for China Railway Construction, said by e-mail that the construction company is in exploratory talks about a possible contract for the Union Village project, which have yet to make any “meaningful progress.”
Chinese builders have sought growth in overseas markets as the nation’s economic expansion cooled and Premier Wen Jiabao continued a campaign to rein in real estate prices. Beijing- based China Railway Construction said this week its new contracts from abroad surged more than fivefold in the first nine months compared with a 40 percent gain in domestic orders.
Union Village is designed to include retail, entertainment centers, senior residential communities and a hospital complex, according to its website. Partner David Baker didn’t return a message seeking comment.
China Railway Construction, which is also in talks to build a new stadium for Italian soccer team Inter Milan, rose 5.9 percent to close at HK$8.39 in Hong Kong. The city’s benchmark Hang Seng Index rose 1.3 percent.
The builder surged 16.5 percent in the last three trading days of this week after saying third-quarter profit rose 41 percent to 1.9 billion yuan ($304 million). Earnings rose as China boosted railway-construction investment to help revive economic growth.
The company, one of China’s two biggest rail builders, plans to spend 69.6 billion yuan on property developments in the three years through 2014 as it seeks to diversify. The company intends to spend 54 billion yuan on rail and other infrastructure projects in the period, according to a Nov. 1 bill prospectus.
Real estate accounted for about 3 percent of the company’s revenue in 2011. It boosted property pre-sales by 36 percent in the first nine months of this year to 15.6 billion yuan, exceeding the full-year amount in 2011, Deutsche Bank AG analysts Phyllis Wang and Joe Liew said in a note today, citing management.
China Railway Construction has also invested in a copper mine in Ecuador as it expands into new markets. The mine will require $1.72 billion of investment, according to a March statement. The mine’s operator is owned by a 50-50 venture between the builder and Tongling Nonferrous Metals Group Holdings Co.
To contact Bloomberg News staff for this story: Steven Yang in Beijing at firstname.lastname@example.org