Debt-laden tech firm LeEco’s founder ordered to return to China by securities commission
The founder of beleaguered tech conglomerate LeEco is facing yet another huge headache. Jia Yueting has been ordered by the China Securities Regulatory Commission’s Beijing branch to return to the country by the end of this month and deal with the company’s debts. In an unusual public letter posted Monday, the CSRC said its failure to repay debts is “a serious violation of the legal rights and interests of listed companies and the interests of investors, with an extremely negative social impact.”
Shares of LeEco’s parent, Leshi Internet Information and Technology Corp., were traded on the Shenzhen Stock Exchange until April, when trading was halted to allow the company to review a restructuring plan. Leshi was launched in 2004 by Jia as a video streaming service. In 2016, it embarked on an ambitious expansion plan under the LeEco brand, which included an agreement to buy American TV maker Vizio for $2 billion (the acquisition was later called off), the launch of smartphones, smart bikes and other consumer electronics and a financial partnership with Los Angeles-based electric vehicle startup Faraday Future. To fund those ventures, LeEco borrowed billions of dollars from investors, with Jia using his own shares in Leshi Internet as collateral to secure funds from securities brokerages.
LeEco’s expansion failed to take off, however, and as pressure from lenders mounted, in July Jia resigned as chairman of Leshi Internet after promising on his social media accounts to repay the LeEco’s debts.
The CSRC said that it has sent letters to Jia asking him to return to China since September, but “so far have not seen any action taken by [Jia].” Earlier this month, Jia was placed on China’s official list of debt defaulters after he failed to pay back more than 470 million yuan ($71 million) to Ping An Securities Group and last week Hong Kong media reported that LeEco’s local branch had filed a petition with the territory’s high court to begin liquidation.
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Published at Tue, 26 Dec 2017 10:25:41 +0000