China: LeEco’s cash troubles ‘far worse than expected’, says chairman

Jia Yueting, co-founder and head of Le Holdings Co Ltd, also known as LeEco and formerly as LeTV, poses for a photo in front of a logo of his company after a Reuters interview at LeEco headquarters in Beijing, China, picture taken April 22, 2016. REUTERS/Jason Lee

LeEco‘s cash problems are “far worse than expected” and the funds raised in recent months are unexpectedly not enough to help the Chinese technology conglomerate ride out the crunch, its chairman, Jia Yueting, said on Wednesday.

LeEco, one of China’s most ambitious companies that grew from a Netflix-like video website to a business empire spanning consumer electronics to cars within 13 years, is struggling to support its goals that include beating Elon Musk’s Tesla Motors in premium electric vehicle making.

Its billionaire founder and CEO Yueting has previously said the firm was facing a “big company disease” and battling a cash crunch after expanding at an unprecedented rate.

Earlier this year, Jia thought the company had found a solution to its cash problems when Chinese property developer Sunac agreed to invest 15 billion yuan ($2.21 billion), including 9 billion yuan into LeEco’s non-listed entities.

“We had thought some 9 billion yuan for the non-listed units would have been able to solve all the problems, the result obviously did not meet our expectations,” Jia said at the annual shareholder meeting of the group’s main listed unit, Leshi Internet Information & Technology Corp.

“Since October, we took some measures and made some mistakes, but LeEco’s non-listed units’ finances got tighter. This is what we discovered over two-to-three months,” he said, a company transcript of the meeting held in Beijing shows.

LeEco will need to further consolidate its non-listed units in the next two-three months, “dispose of some fixed assets and even equity assets” in order to combat what Jia described as “a second cash crunch” from April.

He added that although LeEco had paid back some 15 billion yuan in debt, including loans under his name, the company still did not have enough funding support.

Choosing to repay debts instead of refinancing operations had hurt the company’s ability to get back on track, Jia said.

On business plans, LeEco’s car unit – which Jia described as the number one source of LeEco’s financial troubles – is seeking to complete round-A financing and start production as soon as possible, while the company also plans to focus on strengthening its smart TV business.

Also Read: LeEco saga: Jia Yueting’s crumbling empire

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Reuters

Singapore Reporter/s

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Following vacancies can be applied for (only in Singapore).   

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  • A reporter who can get behind the scenes and reveal how funding rounds are put together, or why they’ve failed to materialise. She/he in this role will largely focus on long-format stories. 
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Singapore Reporter/s

In Singapore, we are looking to double our reporting team by this year-end to comprehensively cover the fast-moving world of funded startups and VC, PE & M&A deals. We want reporters who can tell our readers what is really happening in these sectors and why it matters to markets, companies and consumers. The ability to write precisely and urgently is crucial for these roles. Ideal candidates must have to ability to work in a collaborative, dynamic, and fast-changing environment. We want our new hires to be digitally savvy and ready to experiment with new forms of storytelling. Most importantly, we are looking for hard-hitting reporters who work well in a team. Collaboration and collegiality are a must.

Following vacancies can be applied for (only in Singapore).

Following vacancies can be applied for (only in Singapore).   

  • A reporter to track companies/startups that have raised private capital, and have the potential to become unicorns. SEA currently has over 40 companies with a valuation of over $100 million and under $1 billion.
  • A reporter who can get behind the scenes and reveal how funding rounds are put together, or why they’ve failed to materialise. She/he in this role will largely focus on long-format stories. 
  • A journalist to track special situations funds, distressed debt and private credit (from the PE angle) across Asia.