LeEco’s Listed Arm Extends Trading Halt for Restructuring Plan
Leshi Internet Information & Technology Corp., the listed arm of embattled tech giant LeEco, extended its share-trading halt after a six-month suspension, citing uncertainties in a restructuring plan.
Shenzhen-listed Leshi said in a filing Monday that trading of its stock would remain suspended after Oct. 17 because of “significant and unprecedented issues” related to the restructuring plan. As a result of those uncertainties, Leshi will be unable to release an asset restructuring plan on Oct. 16 as scheduled, the company said.
The trading halt for Leshi, the online video business of cash-strapped LeEco, began April 17 pending review of a restructuring plan. Under rules of the Shenzhen bourse, companies such as Leshi that are listed on its Nasdaq-like growth enterprises board can halt trading for no more than six months unless significant, unprecedented matters or cross-border transactions are involved.
An official at the Shenzhen exchange said it is unclear when Leshi will resume trading, but the bourse and related regulators will urge the company to release its restructuring plan and resume trading as soon as possible. Some investors have already written down the value of their Leshi holdings.
Leshi, founded by billionaire Jia Yueting, unveiled a plan in December 2015 to acquire Le Vision Pictures, LeEco’s filmmaking subsidiary. But the transaction was postponed after the worse-than-expected performance of China’s film market since the third quarter last year and the subsequent cash crunch of LeEco, which quickly spilled over to the listed arm.
LeEco’s cash woes have led to frozen assets of its subsidiaries and the departure of Jia as Leshi’s chairman. In January, Sunac China, one of the country’s biggest property developers, injected 15 billion yuan as a white knight into Leshi, Le Vision Pictures and Leshi Zhixin, the smart TV unit of LeEco. In July, Leshi’s board elected Sunac Chairman Sun Hongbin as the company’s chairman.
As Sunac takes control of LeEco’s major assets, market expectations have risen on a major restructuring to revive LeEco. In June, Le Vision Pictures’ CEO Zhang Zhao said the time for a merger of Le Vision Pictures and Leshi was coming. The two companies’ businesses are complementary and would benefit from integrating platforms, devices and content production, Zhang said.
In a July meeting with Leshi shareholders, Sun said he was optimistic about the future of Le Vision Pictures.
In late September, Leshi changed its name to New Le Shi Information & Technology Corp., a move seen as gesture to usher in a new chapter for the company’s business strategy.
But investors are concerned about the company’s valuation after any trading resumption following the year-long cash crunch. Since July, several mutual funds have slashed the value of their holdings of Leshi to a range of 20 yuan to 22 yuan, with more than 30 yuan when Leshi halted trading in April.
Contact reporter Han Wei (firstname.lastname@example.org)
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