A government body has taken over China Evergrande Group‘s soccer stadium in Guangzhou with a view to selling it, a person with direct knowledge of the matter said, as the debt-laden property developer scrambles to meet liabilities.
Evergrande, which has been struggling to meet repayments on over $300 billion in debt, is also considering selling the money-losing Guangzhou Football Club, the person said.
Construction on the 12 billion yuan ($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 halted construction due to its lack of capital and ceded control to local authorities who plan to sell the stadium, or – in the absence of buyers – acquire it via state-owned Guangzhou City Construction Investment Group, the person said, declining to be identified as the matter is not public.
Another person familiar with the matter said construction had stopped for at least three months.
Evergrande declined to comment. In September, it said work on the stadium was proceeding “as normal”.
The Guangzhou city government did not answer calls, while Guangzhou City Construction Investment did not respond to a faxed request for comment.
Tenterhooks
Evergrande was once China’s top-selling property developer but is now struggling to repay creditors and suppliers. Local governments across China are steering sales of some of its assets, people familiar with these matters have said.
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 $82.5 million before a 30-day grace period expires on December 6.
Guangzhou Football Club
Evergrande bought control of Guangzhou FC for 100 million yuan in 2010, and saw its value hover at 19 billion yuan before it was delisted in March. However, the club has suffered high-profile exits against the backdrop of its owner’s vast financial woes.
In September, the eight-times Chinese Super League champions said head coach Fabio Cannavaro had left by mutual consent. Brazil-born forward Ricardo Goulart, who took Chinese citizenship to help China reach the World Cup, also terminated his contract with the club, it was reported this month.
An Evergrande-owned soccer school has laid off over 100 staff since August due to liquidity constraints, a person close to the school and a lawyer representing some of the staff said. Both declined to be identified due to sensitivity of the matter.
Foreign coaches and translators have been asked to leave, the lawyer also said.
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.
• Reuters with additional editing by Kevin Hamlin
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