China Railway Construction Corporation, a state-backed railway builder, has won the Phase 1 for the development of the Xuzhou urban rail transit line 2 project. 

Xuzhou is a major city in and the fourth largest prefecture-level city of Jiangsu Province, China. It has a population of around 1.7 million people.

The construction period of the project is five years. Total investment in the project is CNY 16.98 billion (US$2.58 billion), which represents 2.87% of the revenues of the company in 2014.

The project developer is a joint venture set up by China Railway Construction Corporation and Xuzhou Urban Rail Transit. China Railway Construction Corporation and its subsidiaries are the contractor of the project. The venture has a registered capital of CNY 1 billion (US$152 million), of which China Railway Construction Corporation hold 51% equities by an investment of CNY 510 million and the Xuzhou company holds the remaining 49% by an investment of CNY 490 million.

The concession period for the project is 25 years. The rate of return on investment is over five-year benchmark lending rate published by the People's Bank of China plus 2.45%.

We announced yesterday that China Railway Construction has announced a plan to raise US$500 million by issuing a bond convertible shares to fund business operations.

The company has engaged JP Morgan, China International Capital Corp and UBS as joint lead managers of the bond issuance, which is convertible into shares equivalent to 2.7% of its total issued shares. The zero-coupon will not pay interest and will mature in five years.