China Evergrande Group will receive a refund of $818m from Guangzhou following the cancellation of contract to construct a football stadium, reported Bloomberg.
The refund amount will be earmarked into a project escrow account.
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Evergrande stated in a regulatory filing that the funds will be used to clear debts associated to the Guangzhou Evergrande Football Stadium contract.
The company expects to report a loss of about $190m (CNY1.25bn) for the total book value consisting of the land, buildings and other improvements without the refund.
In April 2020, Evergrande signed a contract for the use of the Guangzhou land, which has been earmarked for sports facilities and industrial use.
A government body had taken over the land for the stadium with a view of selling it as the world’s most indebted property developer aims to reduce liabilities, Reuters reported in November.
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By GlobalDataThe company was also exploring sale of Guangzhou Football Club, Reuters had then reported.
This contract enabled use of the land for commercial and sports purposes for four decades, and for other business uses for five decades.
Evergrande had commenced construction of the stadium with a planned seating capacity for 80,000 people.
This cancellation of the stadium contract comes as the beleaguered company failed to deliver a “preliminary restructuring plan” to its investors by the end of July. Instead, the firm delivered a “preliminary restructuring principles” for its offshore loan.
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Image: The football stadium is planned to have seating capacity for 80,000 people. Credit: CamiloCote from Pixabay.
