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Property developer bankruptcy to impact Okinawa projects

Date Posted: 2008-07-25

One of Japan’s largest property developers, Tokyo-based Zephyr, has slipped into bankruptcy, sending turmoil to Okinawa where its branch office has more than a dozen major projects under way.

Zephyr, citing fallout from the American sub prime mortgage loan difficulties, has received protection from creditors by the Tokyo District Court. The move freezes claims against ¥94.9 billion in debts, and is expected to cause the company’s delisting by the Tokyo Stock Exchange. Zephyr’s subsidiary company, Kondo Sangyo, had filed for bankruptcy protection two months ago.

Okinawa officials are reeling over the Zephyr announcement, which plunges a series of major projects within the prefecture into chaos. Tomigusuku City’s Toyozaki area had Zephyr at the heart of its new construction projects, including the Tomiton shopping center. The shopping center has opened, but another 66,000 square meters is being developed in conjunction with Zephyr.

Among the other 12 major projects being handled by Zephyr’s Okinawa branch office are Itoman City Resort Hotel, Fuchaku Resort Condominium Hotels near Hotel Moon Beach Resort in Onna Village, the Naha City Naha Tower project, the Zephyr Naha building, Miyakojima City’s Sunayama Resort Hotel and Golf Course, and Ishigaki’s Oceanside housing area project. Shock and disappointment are being registered in construction and city offices across the prefecture, with officials all asking “what’s going on?”

“Our town project has already begun to develop, and some projects are open,” says the business invitation section director for Tomigusuku City’s Toyozaki operations, “and the next projects have only been waiting for construction materials for the hotels and housing area, and also the amusement park.” Okinawa Prefecture’s Land Development Section says “we have to keep the damages as small as we can, and we’ll do an alignment with Tomigusuku City.” Miyakojima City’s Sunayama Resort Hotels development was moving forward until the Zephyr blow, but now will have to wait. An official says the area’s whole blueprint is going to disappear if something isn’t done.

Investors are the key to turning Zephyr’s financial woes around. Zephyr president Takao Iida says “we are going to get new investors from overseas, but overseas funds have slowed.” He says his company couldn’t sell its “securities to funds or investors."

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