Image Source: The Street
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 stadium.
Although problems have plagued the stadium’s construction for months, it began more than two years ago. The venue served as the home field for Guangzhou FC, a premier team that Evergrande acquired a controlling interest in 2010.
The company also stated that debts associated with the project would be paid with the proceeds of the purchase. The announcement comes as Evergrande is attempting to raise money to pay off debt.
The company, formerly China’s top-selling real estate developer, has been experiencing financial difficulties since last year due to its more than $300 billion in debt, of which about $20 billion is held by investors from outside China.
The Guangzhou Municipal Planning and Natural Resources Bureau would receive the land, buildings, and other assets related to the stadium under the terms of this agreement, the business stated in a statement to the Hong Kong Stock Exchange.
It declared that construction on the Guangzhou Evergrande Football Stadium would go on despite the country’s fiscal difficulties in September 2021. However, according to a November report from Reuters, a government agency acquired ownership of the stadium last year and planned to sell it.
Evergrande was reportedly thinking of selling Guangzhou FC at the time, according to Reuters. But the club was not mentioned in the most recent Evergrande statement.
Construction on the project began in the same year that the business paid $1 billion to use the site in April 2020. By the end of this year, the $1.8 billion (£1.5 billion) stadium, which was planned to contain at least 80,000 seats, should have been finished.
Guangzhou FC was under the administration of Evergrande in 2010, and the team’s name was changed to Guangzhou Evergrande Taobao FC. The squad was reinforced thanks to a fresh infusion of cash and swiftly earned a promotion to the top division of Chinese football. Since 2011, it has won the Chinese Super League championship eight times, including seven consecutive seasons.
The club is now near the bottom of the league this season. The club announced at the beginning of the year that it would return to its previous name, Guangzhou FC. The provincial capital and largest city of Guangdong in southern China is Guangzhou.
More problems for Evergrande
Evergrande announced on Sunday that one of its subsidiaries had been penalized with a payment of $1.1 billion for defaulting on debt.
The firm asserted that Evergrande Group (Nanchang) Co. Ltd. must pay the sum to guarantee its obligations. It occurred only two days after it released an eagerly awaited declaration regarding its plans to restructure its foreign loans.
The business announced that as a sweetener, it would offer its creditors in other countries asset packages that would include shares in its abroad subsidiaries, including a company that sells electric vehicles and a provider of property services.
However, several critics criticized the proposal for not detailing how the company intended to reorganize its enormous liabilities.
The company announced last month that two of its senior executives had resigned after an internal investigation revealed that they had misappropriated almost $2 billion in loans.
The chief executive of Evergrande, Xia Haijun, and the chief financial officer, Pan Darong, was discovered to have been complicit in the diversion of loans secured by its property services unit to the larger group.
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