China tech gi­ant LeEco con­firms as­sets frozen

Kuwait Times - - TECHNOLOGY -

As­sets linked to Chi­nese tech gi­ant LeEco have been frozen in a dis­pute with a cred­i­tor, a unit of the trou­bled com­pany has con­firmed, high­light­ing its per­ilous fi­nan­cial state. Chi­nese fi­nan­cial mag­a­zine Caixin first re­ported Mon­day that a Shang­hai court had or­dered the freez­ing of 1.237 bil­lion yuan ($182 mil­lion) in as­sets con­nected to LeEco, its sub­sidiaries, and bil­lion­aire founder Jia Yuet­ing.

The court rul­ing was in response to le­gal ac­tion brought by China Mer­chants Bank over un­paid loans to a LeEco smart­phone unit, Le­view Mo­bile. LeEco was founded in 2004 by Jia to pro­vide on­line video stream­ing but has since launched ag­gres­sive for­ays into self-driv­ing cars, smart­phones, film­mak­ing, and sports broad­cast­ing rights that have plunged it into a cash crunch.

In a state­ment late Tues­day to the Shen­zhen stock ex­change, Leshi In­ter­net In­for­ma­tion and Tech­nol­ogy Cor­po­ra­tion-a listed LeEco sub­sidiary-said 519 mil­lion of its shares owned by Jia, which were used as col­lat­eral in the loans, had been frozen by the court. The state­ment did not re­fer to the ap­par­ently sep­a­rate“as­sets”men­tioned by Caixin.

Adding to LeEco’s woes, debt col­lec­tors from 19 firms in­clud­ing some of its sup­pli­ers have gath­ered at the com­pany’s Bei­jing head­quar­ters for the past two days to de­mand money they claim they are owed, the Na­tional Busi­ness Daily re­ported yes­ter­day. Pic­tures posted on­line showed peo­ple ly­ing or sit­ting on blan­kets and yoga mats in­side the build­ing. Leshi’s state­ment did not com­ment on LeEco’s larger cash woes. LeEco and the bank did not im­me­di­ately re­spond to AFP re­quests for com­ment. In a state­ment emailed ear­lier to Bloomberg News, China Mer­chants Bank said the busi­ness risks in the dis­pute were un­der con­trol, with­out elab­o­rat­ing, adding that the im­passe could be re­solved through ne­go­ti­a­tions with LeEco.

Some­times re­ferred to as a com­bi­na­tion of Net­flix, Ap­ple, Ama­zon and Tesla, LeEco last year an­nounced bold plans to break into the US mar­ket, but has since throt­tled back fol­low­ing a se­ries of set­backs. In a let­ter to em­ploy­ees in De­cem­ber, Jia ad­mit­ted the firm was cash-strapped and had “blindly sped ahead” with ex­pan­sion.

In Jan­uary, it se­cured a $2.2 bil­lion in­vest­ment life­line from a group led by prop­erty de­vel­oper Sunac China Hold­ings. But a month later the Asian Foot­ball Con­fed­er­a­tion (AFC) said it had ter­mi­nated a $100 mil­lion con­tract with sub­sidiary LeS­ports to broad­cast AFC games in China af­ter re­ports of pay­ment de­faults. In April, LeEco dropped a bid to ac­quire US tele­vi­sion maker Vizio and in May an­nounced it was lay­ing off 70 per­cent of its US staff, or 325 jobs.

LeEco’s trou­bles have been cited as a cautionary tale aris­ing from a flood of Chi­nese over­seas in­vest­ment in re­cent years. Since late last year, Chi­nese au­thor­i­ties have moved ag­gres­sively to rein in the out­flows amid a fall in the coun­try’s cur­rency, con­cerns over cap­i­tal flight and of­fi­cial warn­ings that many over­seas in­vest­ments were un­sound. —AFP

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