SHANGHAI :
Debt-Laden Leshi Readies for Possible Forced Delisting If Net Assets Prove Negative
Wang Zhen
DATE:  Nov 20 2018
/ SOURCE:  yicai
Debt-Laden Leshi Readies for Possible Forced Delisting If Net Assets Prove Negative Debt-Laden Leshi Readies for Possible Forced Delisting If Net Assets Prove Negative

(Yicai  Global) Nov.19 -- Chiefs of Leshi Internet Information and  Technology, the listed arm of Chinese tech conglomerate LeEco, have shed  some light on the cash-strapped firm's financial situation.

Leshi  had over CNY5 billion (USD720 million) in debt to suppliers and service  providers as of at the end of September, Zhang Wei, the chief financial  officer of Leshi said, adding that loans from financial institutions,  as well as other interest-bearing liabilities, amounted to CNY8 billion.  This totals CNY13 billion (USD1.9 billion) in debt. 

The  Beijing-based firm has been in trouble since its  founder Yueting overstretched his empire into billions of dollars of  debt and then fled the country to work on his non-affiliated carmaker,  California-based Faraday Future.

Bai  Bing, the secretary of the board, considered the option of bankruptcy  and stock market exit. Delisting involves that many factors align and  that the firm is seeking ways to arrange the disposal but no specific  measures have been disclosed, Bai added.

Leshi's [SHE:300104] stock has sunk from its peak this year, namely CNY15.33 (USD2.21) in January to close at CNY3.39 today.

The  firm could not repay its dues of about CNY1.9 billion to Beijing  Zhongtai Chuangying Enterprise Management on time, and thereby breached  its contract. Zhongtai may take legal action to claim its rights.

Leshi  has tried to negotiate with suppliers and seek government help and  policy support, Zhang said, adding that no effective plan has emerged  yet. The firm hasn't made any new progress in the debt problem, Bai  added.

Leshi's  net assets attributable to shareholders from January to September were  CNY365 million below zero (USD52.6 million). Its net profit attributable  to shareholders was negative CNY1.5 billion. Leshi's stock may be  suspended its audited net assets have not picked up by year-end, the  company said in a related warning on Nov. 8.

Jia  Yueting had almost 1 billion stocks of Leshi, holding a nearly 25  percent stake, while almost 90 percent of those shares were pledged as  of Nov. 7. This equity is frozen due to the fact that the government has  blacklisted Jia.

Editor: Emmi Laine 

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Keywords:   Leshi,Le Eco,debt