Quarterly report pursuant to sections 13 or 15(d)

DEPOSIT FOR BT PROJECT

v2.4.0.8
DEPOSIT FOR BT PROJECT
6 Months Ended
Jun. 30, 2013
Deposit For Bt Project [Abstract]  
Deposit For Bt Project Disclosure [Text Block]
 
14.
DEPOSIT FOR BT PROJECT 
 
Deposit for BT project as of June 30, 2013 and December 31, 2012 consisted of the following:
 
China Dredging
 
 
 
June 30, 2013
 
December 31, 2012
 
 
 
(Unaudited)
 
 
 
 
 
 
 
 
 
 
 
 
Investment in a Build-Transfer (BT) project
 
$
67,862,613
 
$
66,852,860
 
 
On September 29, 2012, Lianjiang Kemen Port Construction Development Co., Ltd (“LKPC”) and China Gezhouba Group Co., Ltd (“CGGC”) entered into a contract for a BT project in Kemen Industrial Zone of Lianjiang County, Fujian Province, the PRC, with an estimated investment of $201 million. The BT project undertaken by LKPC involves dredging, reclamation and cofferdam construction, with a reclamation area of 10.3 million square meters, a reclamation volume of 29.3 million cubic meters, a total cofferdam length of 4,545 meters, a total length of pioneer road of 38,948 meters and a construction period of eighteen months. On October 29, 2012, China Dredging's subsidiary Pingtan Xingyi entered into a supplementary contract with CGGC, Gezhouba Xinjiang Engineering Co., Ltd, which is a subsidiary of CGGC, and Fujian Yihai Investment Ltd, a related company owned and controlled by members of the family of Xinrong Zhuo. Under the supplementary contract, Pingtan Xingyi is responsible for part of the investment, financing, dredging and reclamation within the scope of the BT project, and will deliver the project to the tenderer LKPC after the project is completed and accepted.
 
During the fourth quarter of 2012, a deposit of $67 million has been placed as China Dredging’s (through its Pingtan Xingyi subsidiary) portion of the share capital to form a company with CGGC for the sole purpose of completing the BT project for LKPC. The formation of this new company is yet to be completed. The Group will own a 49% interest in the company and will account for its investment using the equity method. CGGC will own the other 51% interest in the company. The Group is under no legal obligation to provide additional capital in the company and it is not expected that additional capital will be needed. If, however, the project eventually requires more than the expected $201 million, to the extent the additional funds are not provided by LKPC, China Dredging, in consultation and negotiation with CGGC, may decide that it is desirable to provide additional capital.
 
As of June 30, 2013, Pingtan Xingyi has RMB 246.5 million in the custody of Fujian Yihai.