Evergrande gets $818m as football stadium land deal cancelled

Image credit: BBC

Chinese real estate behemoth Evergrande, which is heavily indebted, claims it will collect $818 million after terminating a deal to purchase land rights for a new football stadium.

The stadium’s construction began more than two years ago, but problems have plagued it for months.

Evergrande acquired a majority interest in the top-tier team Guangzhou FC in 2010, whose stadium it built.

The company noted that the proceeds from the sale will be used to pay off project-related debts.

Evergrande is currently trying to raise money to pay off debt when the news is made.

The company, which was formerly China’s top-selling real estate developer, has been struggling since last year because of its more than $300 billion in debt, of which about $20 billion is held by foreign investors.

The Guangzhou Municipal Planning and Natural Resources Bureau would receive the stadium’s land, structures, and other assets, the business stated in a statement to the Hong Kong Stock Exchange.

Reuters stated at the time that Evergrande was also thinking about selling Guangzhou FC. But the club was not mentioned in Evergrande’s most recent announcement.

The $1.8 billion (£1.5 billion) stadium was projected to have at least 80,000 seats when it was finished this year.

Evergrande announced on Sunday that one of its companies has been penalised by $1.1 billion for not upholding its debt obligations.

The company announced that, as a sweetener, it will provide its offshore creditors with asset packages that may include shares in its foreign companies, including a company that sells electric vehicles and offers property services.

However, other critics felt that the proposal was lacking in specifics regarding how the company intended to reorganise its enormous liabilities.

The company announced last month that two of its senior executives had resigned after an internal investigation revealed that they had abused about $2 billion in loans.

Evergrande claimed to have discovered that chief executive Xia Haijun and chief financial officer Pan Darong were responsible for using the property services unit’s secured loans for the benefit of the entire business.