Embattled Chinese real estate giant Evergrande has canceled a contract to build a 5.52 billion yuan ($818 million) football stadium in a southern city, a filing said.
The property giant has been locked in restructuring negotiations after racking up $300 billion in debt after Beijing cracked down on excessive debt and rampant speculation in the real estate sector.
Last week, the company missed a self-imposed deadline to release a preliminary restructuring proposal, despite making positive progress.
In a filing with the Hong Kong Stock Exchange late Thursday, Evergrande said that “the group’s liquidity problem has negatively impacted the development and construction of the property in Guangzhou.”
Evergrande inked a deal with the city’s authorities in 2020 to use the land, which is earmarked for sporting and industrial purposes.
The contract called for commercial and sporting use of the property for 40 years and other business uses for 50 years, the filing said.
Evergrande had started construction, including the construction of the Guangzhou Evergrande Football Stadium, which should seat at least 80,000, it said.
The final refund will go into a government-designated escrow account for the project and will be used to pay off debt related to the deal, Evergrande said.
“After deducting the refund, the group is expected to incur a loss of about 1.255 billion yuan on the total book value of the land, buildings, structures and other items at the site,” Evergrande said.
Evergrande, one of China’s biggest developers, has been scrambling to shed assets in recent months, with Chairman Hui Ka Yan using his personal wealth to pay off some of his debt.
The company has also found a potential buyer for its Hong Kong headquarters, according to previous media reports.
Its troubles are emblematic of the problems sweeping China’s massive real estate sector, with smaller companies also defaulting on loans and others struggling to raise cash.
Cash-strapped developers are struggling to deliver projects on time, leading to mortgage boycotts by disgruntled homebuyers in many cities.
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