In March, Chinese property holdings company Sunac loaned ¥15 billion or $2.2 billion to LeEco parent company Leshi. That company’s chairman has just announced that it has spent lots of it repaying the debts it had accrued in its late 2016 expansion of its operations to India and the United States.
“Since October, we took some measures and made some mistakes, but LeEco’s non-listed units’ finances got tighter,” said Jia Yueting in a company meeting. “This is what we discovered over two-to-three months.”
Those unlisted businesses supposedly had ¥9 billion liquid.
The very next month, Jia first announced the company’s cash crunch. The situation travailed to a point where a rumored margin call for Leshi stock on the Shenzhen exchange. A second equity crisis situation arose in April — that was when payroll had to be delayed. Job cuts followed that episode.
While not owing creditors is a good thing, current operations have been negatively impacted. Its smart car project has now gone into a venture capital funding round. As costs to produce television sets have rocketed, the company has rejiggered its strategy for Chinese sales. Furthermore, some fixed and equity assets may have to be sold off before this storm’s weathered through.