Having canceled a deal to purchase land rights for a new football stadium, heavily indebted Chinese real estate developer Evergrande claims it will earn $818 million.
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 business also stated that the funds from the deal would be utilized 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.
According to the agreement, 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.
It declared in September 2021 that construction on the Guangzhou Evergrande Football Stadium would go on despite the country’s debt woes. But according to a November report from Reuters, a government entity acquired possession of the stadium last year and intended to sell it.
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 business paid $1 billion to use the site in April 2020, and work on the project began that same year. The $1.8 billion (£1.5 billion) stadium was projected to have at least 80,000 seats when it was finished this year.
Guangzhou FC was taken over by Evergrande in 2010 and renamed Guangzhou Evergrande Taobao FC. The team was bolstered with fresh funding and swiftly earned a promotion to the top division of Chinese football. It won the Chinese Super League championship eight times starting in 2011, including seven straight seasons.
However, the team is currently quite near the bottom of the league this season. The team announced at the beginning of the previous year that it would go back to its previous name, Guangzhou FC. The largest and capital of Guangdong Province in southern China is Guangzhou.
The tangled web of issues for Evergrande
Evergrande announced on Sunday that one of its companies had been penalized $1.1 billion for not upholding its debt obligations.
According to the company, Evergrande Group (Nanchang) Co. Ltd. is required to pay the guarantor of its obligations. It was announced just two days after the country finally revealed its long-awaited plan to restructure its foreign debt.
The company announced that as a sweetener, it would pay its offshore creditors with asset packages that may include shares in its foreign subsidiaries, 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 reorganize its enormous liabilities.
The company revealed two of its top executives had resigned last month after an internal investigation revealed they had misappropriated 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.