* Developer must bring down 39 buildings on Hainan island
* Debt-laden Evergrande deemed in cross-default
* Share trading halted in expectation of 'inside
HONG KONG, Jan 3 (Reuters) - Cash-strapped property
developer China Evergrande Group said on Monday it had
been ordered to demolish 39 under-construction residential
buildings on the resort island of Hainan, as its shares were
suspended from trading.
Evergrande is struggling to repay more than $300 billion in
including nearly $20 billion of offshore bonds deemed in
cross-default by ratings agencies last month after it missed
Once China's top-selling developer and now at the heart of
an unprecedented liquidity squeeze in the property sector,
Evergrande has been scrambling to raise cash by selling assets
and shares to repay suppliers and creditors.
The world's most indebted developer said late on Monday it
had received an order from authorities at Danzhou city in Hainan
province on Dec. 30 telling it to demolish 39 under-construction
buildings at the Ocean Flower Island project.
It did not disclose the reason for the demolition order.
Reuters could not immediately reach the Hainan provincial
authorities outside Asia business hours.
Local media reported earlier the buildings - stretched over
435,000 square meters - needed to be demolished within 10 days
for illegal construction and environmental violations.
In a post on WeChat late on Monday, Evergrande said it had
been rectifying the environmental issues since 2017.
It told the project's homeowners that it had spent 81
billion yuan ($13 billion) in the past six years to build over
60,000 homes, and the demolition order would not affect the rest
of the development.
Ocean Flower Island is a mega resort development, comprising
theme parks, convention centers and hotels.
Evergrande's shares were suspended from trading earlier on
Monday pending the release of "inside information," it said in a
Hong Kong stock exchange filing without elaborating.
The developer missed new coupon payments worth $255 million
due last Tuesday < VG162759965=>, though both
have a 30-day grace period.
As the list of Evergrande's unpaid creditors and suppliers
continue to grow, the firm has set up a risk management
committee with many members from state companies, and said it
would actively engage with its creditors.
On Friday, Evergrande dialed back plans to repay investors
in its wealth management products, saying each investor could
expect to receive 8,000 yuan ($1,257) per month as principal
payment for three months irrespective of when the investment
"The market is watching the asset disposal progress from
Evergrande to repay its debt, but the process will take time,"
said Conita Hung, investment strategy director at Tiger Faith
"And the demolition order in Hainan will hurt the little
homebuyer confidence (that) remained in the company."
Evergrande said last week 91.7% of its national projects
have resumed construction. Many projects were halted after the
developer failed to pay suppliers and contractors.
Shares of Evergrande shed 89% last year, closing at HK$1.59
Its electric vehicle unit China Evergrande New Energy
Vehicle Group reversed early losses to rise 11% on
Monday, while property management unit Evergrande Services
also turned around from the red to rise 1%.
($1 = 6.3521 Chinese yuan renminbi)
(Reporting by Clare Jim; Editing by Shri Navaratnam, Sumeet