Financially troubled real estate giant China Evergrande Group has announced it will receive RMB5,520,198,158 (£673.8m/€799.3m/$817.7m) after cancelling a contract for land-use rights concerning a project to develop a stadium with a capacity of at least 80,000 seats in the city of Guangzhou.
Evergrande had bid for the land use right of land designated for sports facilities and industrial use in the Xie Village area of Guangzhou, ultimately entering into a contract with the Guangzhou Municipal Planning and Natural Resources Bureau in April 2020.
At that time, Evergrande said it had broken ground on what it claimed would be the world’s largest professional football stadium, with the venue in Guangzhou to be followed by a further three to five stadia with capacities of between 80,000 and 100,000.
The new stadium is set to be home to Evergrande Group’s Chinese Super League (CSL) club, Guangzhou FC, with the company stating it would accommodate up to 100,000 people. Evergrande was due to make a total investment of CNY12bn in the project, which will include a sports complex, with the cost of the 750 acres of land on which it will sit said to amount to CNY6.8bn alone at the time.
With Evergrande intending the return the land use right, the group said it entered into the cancellation agreement with the transferee, Guangzhou Municipal Planning and Natural Resources Bureau, on Wednesday to terminate the original contract.
Under the original contract, the transferors were granted the land use right for commercial and sports uses for a term of 40 years, and for business uses for a term of 50 years. Evergrande said it has commenced construction on the land, including but not limited to the Guangzhou Evergrande Football Stadium, but has not specified the current state of a project that was due to be delivered by the end of this year.
Evergrande said the cancellation agreement will allow it to settle debts related to the project, as the embattled company seeks to raise funds to address wider debt payments. Evergrande is said to be struggling to tackle more than $300bn of debt, of which around $20bn is held by investors from outside the country.
Evergrande last week unveiled a plan for restructuring its offshore debt, which involved offering asset packages to creditors. The stadium project has come under the spotlight over the past year due to Evergrande’s financial concerns.
In September, Evergrande maintained it was committed to completing the stadium, while in November it was reported that Chinese authorities had taken over the project with a view to selling it or acquiring it via the state-owned Guangzhou City Construction Investment Group.
Image: Evergrande Group