LeEco has repaid HKD 807 million ($103.20 million or roughly Rs. 650 crores) of a debt owed to China Merchants Bank and will seek to negotiate with the creditor to secure the release of some of its frozen assets, the wife of the embattled conglomerate’s founder said.
Gan Wei, who has been entrusted by the founder Jia Yueting to exercise shareholder rights at LeEco’s listed units and to handle asset sales, said on her official Weibo account on Sunday that the debt and interest payments owed to China Merchants Bank had amounted to HKD 1.4 billion (roughly Rs. 1,100 crores).
LeEco has repaid part of this debt after selling shares in its smartphone affiliate Coolpad Group, Gan said.
The entertainment, electronics and electric vehicles group has struggled to pay its debts after rapid expansion into multiple sectors sparked a cash crunch and a plunge in the shares of a listed unit – smart TV firm Leshi Internet Information and Technology Corp. At its peak LeEco owed creditors CNY 10 billion (roughly Rs. 9,700 crores).
China Merchants Bank applied in July to have some of LeEco’s assets frozen, saying a LeEco unit, Leview Mobile HK, had been late making interest payments on a loan.
In a letter published last week, Jia referred to the loan as one of the key causes of the cash-flow problems.
“Our next step is to actively seek communication with China Merchants Bank with the hope that we can get some of our frozen assets proportionately released so that we can repay more of our debts. We hereby request China Merchants Bank to understand and support us”, Gan said in the post.
China Merchants did not immediately respond to a request for comment.
Gan also said CNY 929 million (roughly Rs. 900 crores) worth of assets had been transferred from LeEco’s e-commerce subsidiary LeMall to another of its core listed unit’s Tianjin-based subsidiaries, New Leshi Smart Home, to pay off some debts. The firm said last week that it was trying to get CNY 3 billion (roughly Rs. 2,900 crores) worth of funding.
Founder Jia was placed on an official blacklist of debt defaulters in early December, a move taken by Chinese courts to put pressure on people and entities to repay debts, and was ordered by regulators to return to the country before the end of 2017 to address the mounting debt pile linked to his firms.
But Jia defied the order to return, saying he needed to stay in the United States as a fundraising for his electric car business was making progress. He empowered his wife and brother, Jia Yuemin, to act on his behalf.
© Thomson Reuters 2018