Pressure mounts on LeECO as bank freezes assets
05 July 2017
Troubles for Chinese conglomerate LeEco continued to mount yesterday after a Shanghai court froze $182 million in assets controlled by its chairman Jia Yueting, over unpaid debts.
According to commentators, the latest development suggests billions of dollars recently raised by LeEco had not been enough to arrest its downward spiral. Jia, who had, at one stage boasted about rivalling Apple and Tesla on the world stage, admitted only days ahead of the asset freeze, that the company's cash problems were "far worse than expected."
According to China's state news agency Xinhua, the frozen assets belonged to Jia, his wife, and three LeEco affiliates.
Last year Jia was China's 37th richest individual with estimated net worth of $4.5 billion, according to Forbes, but is now believed to be worth billions less.
Jia founded LeEco in 2004 as LeTV, an internet video service. It went on to become an early market leader and came to be known as the "Netflix of China." The company then branched out into content creation for its online services. It acquired local and international sports rights and launched film and TV studio Le Vision Pictures.
The decline set in with Jia's next bold move aimed at emerging as a world-leading maker of devices, producing everything from smartphones and smart TVs and even high-concept electric cars.
China Merchants Bank Co Ltd said in a statement yesterday that it had applied to have some of LeEco's assets frozen due to subsidiary, Leview Mobile HK Limited, making late interest payments on a loan.
"CMB's Shanghai branch repeatedly urged repayment without success and so sought to use legal means," the bank said. It added that it now had risks related to the loan under control and did not rule out using "friendly talks" to resolve the issue.
A LeEco spokesman said the case concerned "financing loans related to LeEco's smartphone business", but added LeEco had enough collateral to cover the loan.
"Our senior executives are currently in close communication with various financing units of CMB, and we hope to resolve the related debt issue very soon," he said, Reuters reported.