LeEco’s Controversial Founder Resigns as Chairman of Coolpad
Struggling smartphone-maker Coolpad Group Ltd. said Jia Yueting, founder of its controlling shareholder LeEco, has resigned as the company’s executive chairman and director, four months after making a similar exit from most of his roles at LeEco.
Coolpad became part of the LeEco empire in 2015, when Jia hoped to build the company he founded into an integrated provider of entertainment products and services delivered over devices including televisions, smartphones and in cars. But a year-old cash crunch at LeEco has left many of its assets like Coolpad in the lurch and struggling to stay in business.
Coolpad said that Jia’s resignation as executive chairman and company director was effective on Friday, according to an announcement issued late that day. It did not elaborate on the reasons for his departure. The company added that two nonexecutive directors, Liu Jiangfeng and Abulikemu Abulimiti, have also resigned for personal reasons.
With the departure of those three, Coolpad named existing executive director Liu Hong as chairman, and announced three new nonexecutive directors, all with ties to LeEco. Following the shuffle, Coolpad’s board now has three executive and six nonexecutive directors.
The board shakeup comes after Jia also resigned from most of his executive positions at LeEco in July, leaving new investors to clean up the debt-laden company he founded as a provider of online video services.
Coolpad is facing its own financial difficulties, and has not filed any earnings reports this year. But in April it said it recorded an operating loss of about HK$460 million ($59 million) in the first quarter of 2017, and expected to post an operating loss of HK$600 million to HK$800 million in the first half of the year. It added that it expected its sales for the first half of this year to fall by more than 50%.
As its financial woes mounted, Coolpad’s CEO resigned at the end of August. Last month, the company received a financial lifeline from an investor, Centralcon Enterprises Co. Ltd., which purchased $582 million in Coolpad bonds with the option to convert them to company shares at a later date. If it exercises that option, it would become Coolpad’s second largest stakeholder with 16.6% of the company. LeEco would remain the top shareholder, but would see its current 28.8% stake diluted to 24%.
Coolpad’s shares have been suspended since late March.
Contact reporter Yang Ge (email@example.com)
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