As the debt-laden property developer scrambles to meet liabilities, a government body has taken over China Evergrande Group’s (3333.HK) soccer stadium to sell it. This information was supplied to Reuters by a person with direct knowledge of the matter.
The person said that Evergrande, which has been scrambling to meet repayments on over $300 billion in debt, is also considering selling money-losing Guangzhou Football Club.
In April last year, construction on the 12 billion yuan ($1.86 billion) Guangzhou Evergrande Football Stadium began and was to be completed by the end of 2022, when it was set to be the world’s largest soccer venue by capacity.
But due to lack of capital and 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, Evergrande has halted construction. The source declined to be identified as the matter is not public.
Construction has stopped for at least three months, as explained by another person familiar with this matter. The developer declined to comment. It said in September that work on the stadium was proceeding “as normal”.
Reporters’ calls to the Guangzhou city government were unanswered. Guangzhou City Construction Investment was unresponsive to a faxed request for comment.
Evergrande is now struggling to repay creditors and suppliers despite once being China’s top-selling property developer. The sale of some of its assets is being steered by local governments across China, people familiar with the matter have said.
Its 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 left investors on tenterhooks as they wait to see whether it can meet obligations to pay an overdue coupon worth $82.5 million before a 30-day grace period expires on Dec. 6 after it pulled back from the brink of default in the past month.
For 100 million yuan, Evergrande bought control of Guangzhou FC in 2010 and saw its value hover at 19 billion yuan before its delisting in March. Against the backdrop of its owner’s financial woe, however, the club has suffered high-profile exits.
The head coach Fabio Cannavaro had left by mutual consent, said the eight-time Chinese Super League champions in September. This month, Reuters reported that Brazil-born forward Ricardo Goulart, who took Chinese citizenship to help China reach the World Cup, terminated his contract with the club.
Because of liquidity constraints, an Evergrande-owned soccer school has laid off over 100 staff since august, said a person close to the school and a person with direct knowledge of the lay-off situation. Owing to the sensitivity of the matter they both declined to be identified.
The second person said that foreign coaches and translators have been asked to leave, adding that the school had about 2 billion yuan in liabilities at the end of December 2021.
The number of people employed by the school before and after the redundancies is unclear. The school was operating as normal, according to a person close to Evergrande.
($1 = 6.3901 Chinese yuan renminbi)