The Yan-Ta Shopping Mall development comprises a 275-acre urban park and a 1.3-million-sf, three-story underground high-end shopping mall. Phase I of the development commenced in 2004 and is slated for completion and occupancy in the fourth quarter of this year. Development of Phase II is scheduled to commence in 2006 and occupancy is slated for completion in 2008.

The total investment in the mall and the park is expected to be approximately $100 million dollars. Phase I was appraised last fall at $37.76 million. China Properties Developments director and chief financial officer, Steven Lou, says the company plans "to leverage our position as a publicly traded company to facilitate the financing required to compete this major development."

Expected to close during the second quarter of the year, the merger agreement calls for China Properties Developments to acquire no less than 90% of the outstanding common stock of Shaanxi for 15 million common shares at $1.00 apiece and 15,000,000 Series A Convertible Preferred Stock shares--also at $1.00 apiece--that carry an annual dividend of 5% of the stated value.

According to the agreement, as long as the annual dividend has accrued and not been paid, the holders of the preferred stock may convert those shares into double that amount in common stock. As a result, the 15,000,000 common shares would represent 86.6% of the previously outstanding common stock, and assuming conversion of the Series A preferred stock, the shares issued for Shaanxi would represent 173% of the previously outstanding common stock.

China Properties Developments Inc. owns 90.28% of Xi'an Jiahui Real Estate Co. Ltd., which develops and manages high-end residential, commercial and office real estate in Xi'an, the capital of Shaanxi Province and home to some 6 million people.