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China Evergrande soccer stadium taken over by government -source -Breaking


© Reuters.

HONG KONG/BEIJING – A government body took over China Evergrande Group’s soccer stadium in Beijing, a person familiar with the situation told Reuters. The move comes as the property developer is struggling to repay its debts.

According to a person, Evergrande is considering the sale of Guangzhou Football Club.

The construction of the Guangzhou Evergrande football stadium, which is worth 12 billion Yuan ($1.86 million) began last April and will be completed by 2022. It was to become the largest soccer arena in the world by capacity.

Evergrande, however, has stopped construction because of lack of capital. He also ceded control of the stadium to authorities, who plan to either sell it or, in the absence, acquire it through Guangzhou City Construction Investment Group. The person declined to identify the subject as it is confidential.

A source familiar with the situation said that construction was stopped at least for three months.

Evergrande refused to comment. Evergrande declined to comment on September’s statement that construction was progressing “as usual”.

Reuters called Guangzhou but the city government didn’t respond. Guangzhou City Construction Investment failed to respond to a request by Reuters for comment.

TENTERHOOKS

Evergrande, once China’s most-sold property developer, is currently struggling to pay its creditors and suppliers. People familiar with the situation told Reuters that some assets are being sold by local governments in China.

Evergrande’s problems in repaying offshore bond payments rattled markets. This caused turmoil for the wider property sector, with several developer defaults as well as credit-rating downgrades.

The company pulled away from default within the last month. Investors remain on the edge of their seats as they await to know if it is able to meet its obligations to $82.5m in overdue coupons before the grace period runs out on Dec. 6.

EXIT

Evergrande purchased Guangzhou FC’s control for 100 million Yuan in 2010. It saw the value of Guangzhou FC hover around 19 billion yuan until its delisting on March. However, it has had to deal with high-profile exits in the face of its financial troubles.

In September, the eight-times Chinese Super League champions said head coach Fabio Cannavaro https://www.reuters.com/world/china/coach-cannavaro-leaves-chinas-guangzhou-by-mutual-consent-2021-09-28 had left by mutual consent. Brazil-born forward Ricardo Goulart https://www.reuters.com/lifestyle/sports/goulart-quits-guangzhou-fc-returns-brazil-2021-11-13, who took Chinese citizenship to help China reach the World Cup, terminated his contract with the club, Reuters reported this month.

Since August, an Evergrande-owned soccer school https://www.reuters.com/article/soccer-china-idLTAL3N13V04H20151206 has laid off over 100 staff due to liquidity constraints, said a person close to the school and a lawyer representing some of those staff. Because of the sensitive nature and importance of the issue, they declined to identify each other.

The lawyer stated that translators and coaches from foreign countries were asked to quit.

Unknown is how many students the school had employed prior to or following the redundancies. Evergrande spoke with a person who said that school operations were normal.

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Mike Robinson
Mike covers the financial, utilities and biotechnology sectors for Street Register. He has been writing about investment and personal finance topics for almost 12 years. Mike has an MBA in Finance from Wake Forest University.