China City Railway Transportation Technology Holdings Co. (01522.HK) plans to expand its subway line business in the mainland through a newly-established joint venture with Beijing Mass Transit Railway Operation Corp.
China City Railway will inject more capital into the joint venture company, Beijing City Metro Ltd., to facilitate business enhancement, according to chairman Tian Zhenqing.
The Hong Kong Economic Journal quoted Tian as saying that the joint venture’s current 500 million yuan registered capital won’t be adequate to pay for the acquisition of the operation and income rights of the old airport line in Beijing.
The operation and income rights of the old link are being passed on to Beijing City Metro, with the process expected to be completed in the first half of next year.
Meanwhile, the operation right of a new line to the airport will be put on tender at the end of this year. Beijing City Metro will have to compete with other rail firms in bidding for the rights.
The listed company has issued 665 million new shares to its controlling shareholder Beijing Infrastructure Investment Co. at HK$2.081 apiece in May.
The deal resulted in Beijing Infrastructure’s stake rising to 55 percent from 33.94 percent.
Establishment of a new joint venture was among the conditions of the share issuance, which helped the listed company obtain assets and operating rights from the controlling shareholder.
Tian said he expects more asset injections in the future.
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