China Railway Construction Turning to Legal Means After Mexico Deal

China Railway Construction Turning to Legal Means After Mexico Deal :China Railway Construction Corp. said it would resort to legal means to protect its interests after the Mexican government revoked a $4 billion deal with a Chinese-led consortium.

“The company is extraordinarily shocked by Mexico’s decision. The bidding for the high-speed rail project complied with the requirements of the Mexican government,” state-run China Railway Construction said in a statement Sunday through its verified account on the Tencent Weibo social-media service.

The company also said it has set up a legal team and will resort to legal means to protect its legitimate interests if necessary.

This past Tuesday, China Railway Construction said it won a Mexican rail project valued at $4 billion with a consortium of six companies including state-owned train car maker CSR Corp. The other four companies in the consortium are Mexican.

CSR also confirmed the cancellation of the deal by the Mexican government. “We will continue to keep in contact and communicate with the project owner. We will make announcements in a timely manner for any significant progress,” CSR said in a filed statement with the Hong Kong Stock Exchange.

The Chinese-led consortium was the sole bidder for the rail project after 16 other companies pulled out of the process, including Germany’s Siemens AG, France’s Alstom SA and Canada’s Bombardier Inc. Several said they pulled out after the government declined to give them more time to prepare bids.

Three days after the consortium won the bid, Mexico’s Ministry of Communications and Transportation said it would annul the deal because of public concerns about the bidding process.

Dropping the bid marks an embarrassing about-face for China, which has become a growing provider of high-speed-rail technology to the world. The push is part of China’s effort to export more high-value and technologically sophisticated products.

The cancellation came just days ahead of Mexican President Enrique Peña Nieto ’s visit to China to attend the Asia-Pacific Economic Cooperation conference. He is due to unveil a joint investment fund with China, which has so far invested a tiny fraction in Mexico of the billions of dollars it has spent in Latin America.

The project consists of a 210-kilometer, or 130-mile, electrified track between Mexico City and Queretaro, with construction expected to last 1,210 days and operating maintenance to last about 1,800 days. China Railway Construction said last week it would participate in 60% of the construction services and 100% of the operating-maintenance services, valuing its part of the deal at about $2.9 billion. CSR said it would supply high-speed trains valued at $406 million, which would be equivalent to 2.55% of its 2013 operating revenue.

China’s domestic market is the fastest-growing and largest in the world for high-speed rail systems. China has said it would triple the length of its high-speed rail network to 40,000 kilometers by 2015 from 13,000 kilometers in 2012.

China Railway Construction Turning to Legal Means After Mexico Deal

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