September 7 -- Jiangsu Zhongnan Construction Group (000961) announced on September 6 that it plans to set up a two-year trust scheme through New Times Trust to raise 600 million yuan, which will be invested in Yancheng Zhongnan Construction, reports yicai.com, citing the company’s announcement.

Zhongnan Construction said it set up the trust scheme in order to provide funds to Yancheng Zhongnan to build Yancheng Zhongnan Century City.

Yancheng Zhongnan is Zhongnan Construction’s wholly-owned subsidiary and has registered capital of 250 million yuan. New Times Trust will inject 245 million yuan into Yancheng Zhongnan, so Yancheng Zhongnan’s registered capital will increase to 495.05 million yuan. Zhongnan Construction will account for 50.5 percent of total capital, while New Times Trust will take up 49.5 percent of total capital, according to the agreement.

New Times Trust will be able to sell a 49.5-percent stake in Yancheng Zhongnan after the trust expires. New Times Trust will be able to require Zhongnan Construction to buy a 49.5 percent stake in Yancheng Zhongnan at an annual premium of 14.5 percent.

New Times Trust also plans to lend 355 million yuan to Yancheng Zhongnan at an interest rate of 14.5 percent per year.

Zhongnan Construction used its 50.5-percent stake in Yancheng Zhongnan as collateral, and Yancheng Zhongnan used its land as a pledge for the trust scheme.

According to the China Trustee Association’s report, the country’s real estate industry received trust funds of 605.19 billion yuan by the end of the first half of 2011, a 24.3 percent increase from the first quarter.