Compal Seeks to Calm Speculation on Extent of LeEco's Debt
(Beijing) — Taiwanese contract manufacturer Compal Electronics Inc. has revealed the size of LeEco's debt with the firm, seeking to refute media reports that China's cash-strapped tech giant owes a combined $700 million to Compal and another company.
Compal stated that of the NT$8.29 billion ($260 million) it is owed by LeEco, NT$4.25 billion was overdue — far less than expected following speculative media reports on LeEco's finances.
Compal and LeEco have agreed on a payment schedule, and as of mid-November, "LeEco has honored its repayment obligations," Compal said in a statement Wednesday on the Taiwan Stock Exchange.
Speculation on the severity of LeEco's liquidity crisis has been widespread following CEO Jia Yueting's confession earlier this month of unsustainable growth and imprudent spending. Experts say that the latest unexceptional debt figure may ease concerns over the extent of LeEco's woes.
"It's not that rare for smartphone companies to be behind schedule in paying their suppliers, and from what Compal has said, it looks like LeEco's debts may not be as big as people feared," said Xiang Ligang, founder of a telecom industry portal.
The figure was published as Compal sought to refute Taiwanese media reports claiming that LeEco owed Compal and Truly International Holdings, a Hong Kong-listed display manufacturer, a total of $700 million. Truly has not issued a statement denying the reports.
Compal assured investors that the LeEco manufacturing parts and materials in Compal's hands were worth more than the overdue debt, implying that these could be used to pay back the debt should LeEco default.
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