Chinese Government takes over Evergrande stadium
01 December 2021
A government body has taken over China Evergrande Group’s soccer stadium with a view to selling it, a person with direct knowledge of the matter told Reuters, as the debt-laden property developer scrambles to meet liabilities
Evergrande, which has been struggling to meet repayments on over US$300 billion in debt, is also considering selling money-losing Guangzhou Football Club, said a source involved with the project.
Construction on the 12 billion yuan (US$1.86 billion) Guangzhou Evergrande Football Stadium began in April last year for completion by the end of 2022, when it was set to be the world’s largest soccer venue by capacity.
However, Evergrande has halted construction due to a lack of capital and has ceded control to authorities which plan to sell the stadium, or - in the absence of buyers - acquire it via state-owned Guangzhou City Construction Investment Group, the source said, who did not wish to be named due to the matter is not yet being made public.
Another person familiar with the matter said construction works at the site had been stopped for at least three months.
While Evergrande declined to comment, back in September it said work on the stadium was proceeding “as normal”.
The Guangzhou city government did not answer Reuters’ calls and Guangzhou City Construction Investment did not respond to a faxed request for comment.
Evergrande was once China’s top-selling property developer but is now struggling to repay creditors and suppliers. People familiar with the matter have told Reuters that local governments across China are now steering the sale of some of its assets.
Evergrande’s troubles in meeting offshore bond repayments rattled markets and upended the broader property sector with a string of developer defaults and credit-rating downgrades.
It pulled back from the brink of default in the past month, leaving investors on tenterhooks as they wait to see whether it can meet obligations to pay an overdue coupon worth US$82.5 million before a 30-day grace period expires in a few days times on 6 December 2021.
Evergrande bought control of Guangzhou FC for 100 million yuan in 2010, and saw its value hover at 19 billion yuan before its delisting in March.
However, the club has suffered high-profile exits against the backdrop of its owner’s financial woe.
Since August, an Evergrande-owned soccer school has laid off over 100 staff due to liquidity constraints, said a source close to the school and a person with direct knowledge of the lay-off situation. Both declined to be identified due to sensitivity of the matter.
Foreign coaches and translators have been asked to leave, the second person said, adding that the school had about 2 billion yuan in liabilities at the end of December 2020.
It is unclear how many people the school employed before or after the redundancies. A person close to Evergrande said the school was operating as normal.
*Reporting by Julie Zhu in Hong Kong, Cheng Leng in Beijing and Zhang Yan in Shanghai; Writing by Clare Jim; Editing by Sumeet Chatterjee and Christopher Cushing)