China's Evergrande receives $818m refund from cancelled football stadium deal

The loss of the project comes on top of myriad troubles for the Chinese developer

An Evergrande building in Hong Kong. The Chinese developer says the refund from Guangzhou city will be transferred to a project escrow account. Reuters
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China Evergrande Group, the world’s most indebted developer, said it will receive a 5.52 billion yuan ($818 million) refund from Guangzhou after cancelling a contract to build a football stadium in the city.

The refund will be transferred into a project escrow account, with funds used to settle debts related to the Guangzhou Evergrande Football Stadium deal, the company said in a regulatory filing.

Evergrande said it expects to record a loss of about 1.255bn yuan for the total book value of the land, buildings and other improvements minus the refund.

The developer entered into a contract in April 2020 for use of the Guangzhou land, designated for sports amenities and industrial use. The stadium was taken over by a government body with a view to selling it as the embattled developer seeks to cut liabilities, Reuters reported in November.

Evergrande was also considering selling Guangzhou Football Club, the news service said at the time. Thursday’s stock exchange filing did not mention the club.

The contract allowed for commercial and sports uses for the land for 40 years, and other business purposes for 50 years. Evergrande had begun construction of the stadium that was designed with at least 80,000 seats capacity, according to the filing.

The loss for the project comes on top of myriad troubles for Evergrande. The developer failed to deliver a “preliminary restructuring plan” it had promised by the end of July, fuelling risks investors will grow more impatient as a broader debt crisis in the nation’s property industry spreads.

The beleaguered real estate company instead presented what it called “preliminary restructuring principles” for its offshore debt.

With some $20bn in dollar bonds among total liabilities of about $300bn at stake, any restructuring could be among China’s biggest ever.

Updated: August 05, 2022, 10:28 AM
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