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September 24, 2009
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China Architectural Engineering Inc. (CAEI) provided updates on its Nine Dragon and Dubai Metro System projects. The company said that the Nine Dragon Project successfully passed evaluation and assessment by China's national experts, paving the way for new, large projects to commence by the end of this year and the beginning of next year.
Management is confident that a number of large Nine Dragon projects will launch by the end of this year providing CAEI with substantial new revenue sources for the next several years. The company had entered into an agreement with Shanghai Nine Dragon Co. Ltd. In June 2009, to undertake major projects located in the Nine Dragon Resort, Zhejiang , including a seven-star hotel, a marine park and luxurious villas. The projects are expected to be completed within three years.
In addition, the company said that the first phase of the Dubai Metro was officially opened in early September. Through its subsidiary Techwell Engineering Limited, CAEI had completed a majority of the construction by the end of the second quarter. Techwell has generated approximately $92.8 million in revenue since the commencement of construction in 2008.
However, with less than 5% of the contract remaining to be completed, Techwell was removed by the project’s master contractor, who also called for and received payment of $2.1 million in performance bonds and $7.3 million in advance payment bonds that were issued on Techwell's behalf for the project.
The master contractor believes that it had paid in excess of the construction work performed. CAEI believes that it has fulfilled the requirements of the contract and has engaged Hill International, a construction risk and claims management company, to facilitate resolution of this dispute.
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