Embattled Chinese property giant Evergrande has cancelled a contract to build a football stadium in a southern city in return for 5.52 billion yuan ($818 million), it said in a filing.
The real estate behemoth has been involved in restructuring negotiations after racking up $300 billion in liabilities in the wake of Beijing’s crackdown on excessive debt and rampant speculation in the property sector.
Last week, the company failed to meet a self-imposed deadline to publish a preliminary restructuring proposal, although it said it has made positive progress.
In a filing to the Hong Kong stock exchange late Thursday, Evergrande said “the group’s liquidity issue has adversely affected the development of and construction on the land” in Guangzhou.
Evergrande entered a contract with the city’s authorities in 2020 for use of the land, designated for sports and industrial purposes.
The contract allowed for commercial and sports uses of the land for 40 years, as well as other business uses for 50 years, the filing said.
Evergrande had started construction, including the building of the Guangzhou Evergrande Football Stadium, which was set to have at least 80,000 seats, it said.
The latest refund will enter a project escrow account designated by the government and will be used to settle debts relating to the deal, Evergrande said.
“It is expected that the group will record a loss of approximately 1.255 billion” yuan over the total book value of the land along with buildings, structures and other items at the site after deducting the refund, Evergrande said.
Evergrande, one of China’s biggest developers, has scrambled to offload assets in recent months, with chairman Hui Ka Yan paying off some of its debts using his personal wealth.
It has also found a potential buyer for its Hong Kong headquarters, according to earlier media reports.
Its troubles are emblematic of the problems rippling across China’s massive property sector, with smaller companies also defaulting on loans and others struggling to raise cash.
Cash-strapped developers have increasingly struggled to deliver projects on time, sparking mortgage boycotts from angry homebuyers in many cities.