(Yicai Global) April 10 -- Leshi Internet Information and Technology Co., the listed arm of overstretched Chinese conglomerate LeEco, expects a first-quarter loss of between CNY307 million (USD49 million) and CNY312 million after turning a CNY120 million profit over the same period a year earlier.
The Beijing-based company’s reputation and credibility remain troubled due to tight funding and liquidity at related companies, the firm said in an earnings report yesterday. Income from advertising, terminals and membership all fell substantially on the year, it added.
Management is trying to improve cash flow and supply and sales systems by restoring the operation of core businesses, the firm said. It is also trying to reduce costs and negotiate loan extensions to ease its financial woes, and on April 4 announced plans to take out a CNY198-million loan from Bohai International Trust Co. to repay its debts.
Leshi drove itself into turmoil in 2016 as founder Jia Yueting racked up CNY20 billion in debt trying to prod a finger into every pie, aiming to produce a range of consumer electronics, offer digital services and even develop new-energy vehicles, which he is still trying to do via his US-based carmaker Faraday & Future Inc.
In a board meeting this month, the company agreed to raise capital at New Leshi Smart Home Tianjin Co., which operates the popular LeTV video streaming platform. The unit planned to raise CNY3 billion with a valuation of CNY12 billion in January, but has adjusted its worth to CNY9 billion after negotiating with investors. The move will decrease the parent company’s stake in the subsidiary.