(Yicai Global) Sept. 25 -- Sunac China Holdings has taken control of two of the three units of Jia Yueting's debt-ridden LeEco tech empire that the Chinese property developer helped to prop up in January 2017 with a cash injection of USD2.2 billion.
Sunac bought the 15.33 percent of television set maker Lerong Zhixin Electronic Technology Tianjin held by LeEco's listed arm, Leshi Internet Information and Technology, as well its 21.81 percent interest in film producer Le Vision Pictures, Beijing-based Leshi said in a statement yesterday, citing the results of auctions on Sept. 21 and 22 conducted by the Beijing No. 3 Intermediate People's Court.
Sunac unit Tianjin Jiarui Huixin Corporate Management was the sole bidder and picked up the stakes for about CNY773 million (USD114.6 million), with Lerong Zhixin accounting for about CNY240 million of the total. Tianjin Jiarui becomes the TV maker's biggest shareholder with a 46 percent stake, followed by Leshi Internet at 36.34 percent.
The share purchase values Lerong Zhixin at about CNY1.6 billion (USD232.7 million), or about 6 percent of what it was worth when Sunac helped to rescue it last year. Analysts predict that Tianjin-based Sunac, chaired by Sun Hongbin, will now turn Lerong Zhixin into its smart home business platform.
Leshi Internet has been in trouble since founder Jia Yueting overstretched his empire, piling up billions of dollars of debt and then leaving the country to work on his non-affiliated US electric car startup, Faraday Future. Chinese authorities put the businessman on a credit blacklist and ordered him to return to the country at the end of last year.
Shares of Leshi Internet [SHE:300104] rose by the daily trading limit of 10 percent in Shenzhen today to close at CNY3.59 (USD0.52).
After losing its main subsidiary, Leshi Internet will see a sharp decline in operating income. It had income of CNY7 billion and a loss of CNY13.88 billion in 2017. Lerong Zhixin accounted for CNY4.1 billion of that income and CNY5.76 billion of the red ink.
In the first half of this year, its operating income was CNY1 billion, while the loss came in at CNY1.1 billion. Lerong Zhixin contributed CNY410 million and CNY310 million to those respective figures.
Editor: Emmi Laine