Leshi Warns Wide-Eyed Investors Not to Couple It With Faraday Future
Liao Shumin
/SOURCE : Yicai
Leshi Warns Wide-Eyed Investors Not to Couple It With Faraday Future

(Yicai Global) Aug. 16 -- Leshi Internet Information and Technology, the listed arm of embattled Chinese conglomerate LeEco, has warned investors not to base share-buying decisions on news surrounding Faraday Future, a non-affiliated firm set up by Leshi's founder, after shares shot up to the 10 percent trading limit yesterday.

Leshi does not own shares in Faraday Future or know anything about its long-term plans, production or sales, the Beijing-based company said in a filing to the Shenzhen Stock Exchange. Some 234 million shares traded hands yesterday, more than double its typical trading volume, to push the stock price [SHE:300104] up 7.8 percent to CNY2.35 (USD).34) at the close after a nearly four-hour stint at CNY2.39.

The rush of buyers had come shortly after an announcement that Faraday, an electric carmaker created by Leshi founder Jia Yueting, would build a China headquarters and start making five million vehicles a year by 2028.  

Jia began building his LeEco empire in 2011, and within a few years had a complex network of companies spanning a diverse range of sectors, including automotive, with many cross-owning holdings in their affiliates. That overstretching wound up being the firm's downfall as Jia plunged it into a whirlwind of debt and fled to the United States, where he had kept California-based Faraday a completely separate entity from the conglomerate back home.

The beleaguered entrepreneur has been summoned back to China to pay off debts, which Leshi clocks at CNY7.5 billion (USD1.1 billion), including Jia's personal liability and money owed by non-listed LeEco arms, but he has not returned. Beijing has since added him to a blacklist of debt defaulters.

Faraday itself was in the doldrums until white knight investor Evergrande Health, another Chinese holdings company, agreed in June to invest USD2 billion for a 45 percent stake and to finally get production of the firm's first car, the FF91, underway.

The carmaker has self-imposed a year-end deadline for mass production to begin, and if it misses the cutoff date Evergrande will take over control of the company from Jia.

Editor: James Boynton

 

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Keywords: Leshi , FARADAY FUTURE , Jia Yueting , LEECO