China Evergrande soccer stadium taken over by government: Source

Construction on the Guangzhou Evergrande Football Stadium began in April last year.
Construction on the Guangzhou Evergrande Football Stadium began in April last year.PHOTO: REUTERS

HONG KONG (REUTERS) - A government body has taken over China Evergrande Group's soccer stadium with a view to selling it, a source with direct knowledge of the matter told Reuters, as the debt-laden property developer scrambles to meet liabilities.

Evergrande, which has been struggling to meet repayments on more than US$300 billion (S$410 billion) in debt, is also considering selling money-losing Guangzhou Football Club, the source said.

Construction on the 12 billion yuan (S$2.58 billion) Guangzhou Evergrande Football Stadium began in April last year for completion by the end of next year, when it was set to be the world's largest soccer venue by capacity.

However, Evergrande has halted construction due to lack of capital and ceded control to the authorities, which plan to sell the stadium, or - in the absence of buyers - acquire it via state-owned Guangzhou City Construction Investment Group, the source said, declining to be identified as the matter is not public.

Another source said construction had stopped for at least three months.

Evergrande declined to comment. In September, it said work on the stadium was proceeding "as normal".

The Guangzhou city government did not answer Reuters' calls.

Evergrande was once China's top-selling property developer, but is now struggling to repay creditors and suppliers. Local governments across China are steering sales of some of its assets, sources have told Reuters.

Evergrande's troubles in meeting offshore bond repayments rattled markets and upended the broader property sector with a string of developer defaults and credit-rating downgrades.

It pulled back from the brink of default in the past month, leaving investors on tenterhooks as they wait to see whether it can meet obligations to pay an overdue coupon worth US$82.5 million before a 30-day grace period expires on Dec 6.

Exit

Evergrande bought control of Guangzhou FC for 100 million yuan in 2010, and saw its value hover at 19 billion yuan before its delisting in March. However, the club has suffered high-profile exits against the backdrop of its owner's financial woes.

In September, the eight-times Chinese Super League champions said head coach Fabio Cannavaro had left by mutual consent.

Brazil-born forward Ricardo Goulart, 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 has laid off more than 100 staff due to liquidity constraints, said a source close to the school and a lawyer representing some of those staff. Both declined to be identified due to sensitivity of the matter.

Foreign coaches and translators have been asked to leave, the lawyer also said.

It is unclear how many people the school employed before or after the redundancies. A source close to Evergrande said the school was operating as normal.