China Evergrande Says Construction of Some Projects Has Stalled, Warns of Possible Default

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HONG KONG—Cash-strapped China Evergrande Group said work has been suspended on some of its real-estate projects after it delayed payments to its suppliers and contractors, showing how the developer’s financial troubles have spilled over into its business operations.

The highly indebted company on Tuesday also warned for the first time that it may default on its borrowings if it can’t resolve its liquidity problems.

Evergrande, one of China’s largest residential developers, said it has been selling assets and apartment units to raise cash. The group also said that “with the coordination and support of the government,” it is actively negotiating with suppliers and construction companies to try to get them to resume work on its properties.

“The group will do its utmost to continue its operations and endeavor to deliver properties to customers as scheduled,” Hong Kong-listed Evergrande said in a regulatory filing.

To resolve some of its payables, Evergrande said it recently sold property units to suppliers and contractors to set off around $3.9 billion in outstanding payments.