Danzhou of Hainan questions Evergrande’s property-for-debt plan
What’s new: Regulators in Danzhou City, Hainan Province (southern China), have stepped up oversight of Evergrande Group in China agreements to repay debts with properties as local authorities worry about the risks of such transactions.
Danzhou housing authorities this week told Evergrande affiliates they would closely examine creditors’ claims for properties at Island of flowers in the ocean, a mega complex being developed by Evergrande in the city. Transactions using project assets to repay unrelated debts will be prohibited, authorities said.
City regulators said the move was aimed at protecting the liquidity of the Ocean Flower Island project and securing its delivery.
Why is this important: Evergrande has put forward a plan to use construction projects across China to pay off massive debts. But local authorities are skeptical about the plan for fear of the impact on local economies.
that of Evergrande Flower island by the ocean project in Danzhou is one of the largest man-made archipelagos in the world with a planned investment of 100 billion yuan ($ 15.5 billion). The resort, comprising hotels, theme parks, shopping malls and residences, is slated to open next year.
But as The Evergrande debt crisis intensified, fears arose over the delivery of the project.
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