NOTE 12 – BANK LOANS

 

Short-term bank loans

 

Short-term bank loans represent the amounts due to various banks that are due within one year. These loans can be renewed with the banks upon maturities. At September 30, 2015 and December 31, 2014, short-term bank loans consisted of the following:

 

		September 30,  2015				December 31, 2014
Loan from China Development Bank, due on July 22, 2015 with variable annual interest rate based on LIBOR(1) plus 245 basis points (3.1374% at December 31, 2014), guaranteed by Xinrong Zhuo, Honghong Zhuo, Zhiyan Lin and Shuhui Ke and repaid on due date		$	-			$	5,000,000
Loan from China Development Bank, due on March 9, 2015 with variable annual interest rate based on LIBOR(1) plus 245 basis points (2.777% at December 31, 2014), guaranteed by Xinrong Zhuo, Honghong Zhuo, Zhiyan Lin and Shuhui Ke and repaid on due date			-				3,185,980
Loan from China Development Bank, due on November 24, 2015 with variable annual interest rate based on LIBOR(1) plus 245 basis points (2.777% at September 30, 2015 and December 31, 2014), guaranteed by Xinrong Zhuo, Honghong Zhuo, Zhiyan Lin and Shuhui Ke			9,500,000				9,500,000
Loan from China Development Bank, due on December 22, 2015 with variable annual interest rate based on LIBOR(1) plus 245 basis points (2.8074% at September 30, 2015 and December 31, 2014), guaranteed by Xinrong Zhuo, Honghong Zhuo, Zhiyan Lin and Shuhui Ke			5,000,000				5,000,000
Loan from China Development Bank, due on December 29, 2015 with variable annual interest rate based on LIBOR(1) plus 245 basis points (2.8074% at December 31, 2014), guaranteed by Xinrong Zhuo, Honghong Zhuo, Zhiyan Lin and Shuhui Ke and repaid on August 24, 2015			-				5,000,000
Loan from Industrial and Commercial Bank of China, due on January 23, 2015 with annual interest rate of 2.200% at December 31, 2014, guaranteed  by Xinrong Zhuo, and repaid on due date			-				1,640,693
Loan from Industrial and Commercial Bank of China, due on February 17, 2015 with annual interest rate of 2.000% at December 31, 2014, guaranteed by Xinrong Zhuo, and repaid on due date			-				1,027,217
Loan from China Development Bank, due on February 11, 2016 with variable annual interest rate based on LIBOR(1) plus 245 basis points (2.927% at September 30, 2015), guaranteed by Xinrong Zhuo, Honghong Zhuo, Zhiyan Lin and Shuhui Ke			7,000,000				-
Loan from Fujian Haixia Bank, due on September 7, 2016 with annual interest rate of 7.360% at September 30, 2015, collateralized by Pingtan Fishing's 17 fishing vessels			4,721,584				-
Loan from Fujian Haixia Bank, due on September 20, 2016 with annual interest rate of 4.500% at September 30, 2015, collateralized by Pingtan Fishing’s 17 fishing vessels			2,349,440				-
		$	28,571,024			$	30,353,890

 

(1)

Represents six-month LIBOR rate on the loan commencement date.

 

Long-term bank loans

 

Long-term bank loans represent the amounts due to various banks lasting over one year. Usually, the long-term bank loans cannot be renewed with these banks upon maturities. At September 30, 2015 and December 31, 2014, long-term bank loans consisted of the following:

 

		September 30,  2015				December 31, 2014
Loan from China Minsheng Bank, due on various dates until March 16, 2015 with annual interest rate of 7.741% at December 31, 2014, collateralized by Pingtan Fishing's and Hong Long's fishing vessels and guaranteed by Xinrong Zhuo and repaid on various scheduled due dates		$	-			$	4,874,969
Loan from Fujian Haixia Bank, due on various dates until March 22, 2015 with annual interest rate of 8.400% at December 31, 2014, guaranteed by Xinrong Zhuo and repaid on various scheduled due dates			-				1,629,062
Loan from The Export-Import Bank of China, due on various dates until December 10, 2017 with annual interest rate of 5.250% and 6.400% at September 30, 2015 and December 31, 2014, respectively, collateralized by Hong Long's investment in equity interest of a China local bank			14,573,955				20,265,537
Loan from The Export-Import Bank of China, due on various dates until December 10, 2017 with annual interest rate of 5.250% and 6.400% at September 30, 2015 and December 31, 2014, respectively, collateralized by Fujian International Trading and Transportation Co., Ltd.'s investment in equity interest of a China local bank			2,848,689				3,453,612
Loan from The Export-Import Bank of China, due on various dates until December 10, 2017 with annual interest rate of 5.250% and 6.400% at September 30, 2015 and December 31, 2014, respectively, guaranteed by Hong Long			12,339,073				12,413,456
Loan from The Export-Import Bank of China, due on various dates until December 10, 2017 with annual interest rate of 6.400% at December 31, 2014, respectively, collateralized by Pingtan Fishing's investment in equity interest of a China local bank and repaid in the third quarter of 2015			-				1,906,003
Loan from China Development Bank, due on various dates until November 27, 2023 with annual interest rate of 5.4075% and 6.8775% at September 30, 2015 and December 31, 2014, respectively, guaranteed by Xinrong Zhuo, Honghong Zhuo, Mr. and Mrs. Zhiyan Lin and 14 fishing vessels under construction			11,961,346				12,951,048
Total long-term bank loans		$	41,723,063			$	57,493,687
Less: current portion			(12,150,209	)			(18,868,616	)
Long-term bank loans, non-current portion		$	29,572,854			$	38,625,071

 

The future maturities of long-term bank loans are as follows:

 

Due in twelve-month periods ending September 30,		Principal
2016		$	12,150,209
2017			10,954,075
2018			10,434,700
2019			1,416,475
2020			1,573,861
Thereafter			5,193,743
		$	41,723,063
Less: current portion			(12,150,209	)
Long-term liability		$	29,572,854

 

The weighted average interest rate for short-term bank loans was approximately 2.9% and 1.6% for the nine months ended September 30, 2015 and 2014, respectively.

 

The weighted average interest rate for long-term bank loans was approximately 5.7% and 5.2% for the nine months ended September 30, 2015 and 2014, respectively.

 

For the three months ended September 30, 2015 and 2014, interest expense related to bank loans amounted to $817,321 and $1,314,534, respectively, of which, $0 and $635,050 was capitalized to construction-in-progress, respectively. For the nine months ended September 30, 2015 and 2014, interest expense related to bank loans amounted to $2,856,516 and $4,316,733, respectively, of which, $0 and $1,228,048 was capitalized to construction-in-progress, respectively.