California Observer

Evergrande to Get $800 million as Stadium Deal is off

Image Source: The Street

A deal to purchase land rights for a new football stadium was canceled, and heavily indebted Chinese real estate developer Evergrande claims that it would earn $818 million as a result.

Though the stadium’s construction was set to begin more than two years ago, problems have plagued the project for months. In 2010, Evergrande acquired a controlling interest in the top-tier team Guangzhou FC, whose stadium it was.

According to the business, the funds from the deal will be used to pay off project-related debts. Evergrande is raising money to pay off debt when the announcement is made.

The company, which was formerly China’s leading seller of real estate, has been struggling since last year because of its more than $300 billion in debt, of which about $20 billion is held by investors from outside China.

According to this agreement, the Guangzhou Municipal Planning and Natural Resources Bureau would receive the stadium’s land, buildings, and other related property, the business stated in a statement to the Hong Kong Stock Exchange.

According to a statement made in September 2021, construction on the Guangzhou Evergrande Football Stadium will go on as planned despite the country’s debt crisis. However, according to Reuters news agency’s November report, a government entity gained possession of the stadium last year and intended to sell it.

Evergrande was reportedly considering selling Guangzhou FC at the time, according to a Reuters report. However, Evergrande did not name the team in its most recent announcement.

For the right to utilize the land, the corporation paid $1 billion in April 2020, and the project’s development started that same year. The stadium, which cost $1.8 billion (£ 1.5 billion), was supposed to be finished by the end of the year and feature at least 80,000 seats.

Guangzhou FC changed its name to Guangzhou Evergrande Taobao FC after Evergrande took over the club in 2010. The team was bolstered with the addition of fresh funds and swiftly earned a promotion to the top division of Chinese football. Eight times beginning in 2011, including seven straight seasons, it captured the Chinese Super League championship.

The team, however, is now in the bottom half of the league this season. The team announced at the previous year’s start that it would return to its previous name, Guangzhou FC. Southern Chinese Guangdong province’s capital and largest city is Guangzhou.

More problems for Evergrande

Evergrande announced on Sunday that one of its businesses had received a $1.1 billion fine for not paying its debts.

The company claimed that the payment to a guarantor of Evergrande Group’s liabilities is due. It was made just two days after it released an eagerly expected disclosure about its plans to restructure its foreign debt.

The company announced that, as a sweetener, it would deliver asset packages to its creditors in other countries that would include shares in those companies’ abroad subsidiaries, including a company that sells electric vehicles and a provider of property services.

Some critics, however, felt that the proposal lacked sufficient information regarding how the company intended to reorganize its enormous liabilities.

Following an internal investigation that revealed they had misappropriated about $2 billion in loans, the company announced last month that two of its top executives had resigned.

Evergrande claimed to have discovered that chief executive Xia Haijun and chief financial officer Pan Darong were responsible for using the loans that its property services company secured to lend money to the larger group.

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