(Bloomberg) -- China Evergrande Group, the world’s most indebted developer, said it will receive a 5.52 billion yuan ($818 million) refund from Guangzhou after canceling a contract to build a football stadium in the city.
The refund will be transferred into a project escrow account, with funds used to settle debts related to the the Guangzhou Evergrande Football Stadium deal, the company said in a regulatory filing Thursday. Evergrande said it expects to record a loss of about 1.255 billion yuan -- the total book value of the land, buildings and other improvements minus the refund -- related to the development.
Evergrande entered into a contract in April 2020 for use of the Guangzhou land, designated for sports facilities and industrial use. The soccer stadium was taken over by a government body with a view to selling it as the embattled developer seeks to cut liabilities, Reuters reported in November. Evergrande was also considering selling Guangzhou Football Club, the news service said at the time.
The contract granted Evergrande use of the land for commercial and sports uses for 40 years, and other business uses for 50 years.
The loss for the project comes on top of myriad troubles for Evergrande. The developer failed to deliver a “preliminary restructuring plan” it had promised by the end of July, fueling risks investors will grow more impatient just as a broader debt crisis in the nation’s property industry spreads. The beleaguered real estate giant instead presented what it called “preliminary restructuring principles” for its offshore debt. With some $20 billion in dollar bonds among total liabilities of about $300 billion at stake, any restructuring could be among China’s biggest ever.
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