The cash-strapped Leshi Internet Information & Technology (Beijing) Co. [SHE:300104] (LeTV) received a request from the Shenzhen Stock Exchange today for a written explanation on the legitimacy of its recent share pledge.
LeTV's board of directors decided on Nov. 20 that it would pledge a 26.77-percent stake of its subsidiary Leshi Zhixin Electronic Technology (Tianjin) Co. to Sunac China Holdings Ltd. [HK:1918] to obtain a loan guarantee of USD455.3 million (CNY3 billion). Sunac China is the second largest LeTV shareholder, indirectly holding an 8.56-percent stake.
LeTV had already pledged the aforementioned Leshi Zhixin shares to Sunac China on Nov. 15, per information a relevant institution revealed.
The Shenzhen Stock Exchange sent a letter of inquiry to LeTV, requiring the company to disclose the specific proportion of pledged Leshi Zhixin shares. The Shenzhen Stock Exchange said that the pledge has not been adopted in a shareholders' meeting and required LeTV to provide an explanation of its legitimacy before Nov. 27.
LeTV has been grappling with a financial crisis since Sunac China invested CNY15 billion in it earlier this year. Sunac China Chairman Sun Hongbin took the helm from LeTV founder Jia Yueting, who resigned as the company's chairman and left for the US.