Quick Take: LeEco TV Unit Tunes In Market for New Investors
Cash-strapped tech conglomerate LeEco is seeking investments for its television unit.
The target is to raise 3 billion yuan ($462 million) for the TV subsidiary. The subsidiary is valued at 12 billion yuan, according to a Tuesday statement from LeEco’s listed arm, Leshi Internet Information & Technology Corp. — the TV unit’s largest shareholder. The value is half of what it was a year ago.
The firm has already secured three investors and a quarter of the financial target.
The investors include LeEco’s two largest shareholders — LeShi, and an investment firm controlled by property giant Sunac China. Four months ago, Sunac vowed to turn LeEco around after investing 15 billion yuan in the debt-ridden company in January 2017 and replacing Leshi’s then-Chairman Jia Yueting with Sunac Chairman Sun Hongbin in July.
LeEco has been struggling for more than a year since Jia, the company’s founder, admitted in November 2016 that the company had expanded too quickly into a raft of new businesses such as smartphones and new-energy cars, which went far beyond the company’s core online video and television units. Since then, many of LeEco’s suppliers and business partners have complained of unpaid bills, forcing the company to scramble to raise funds.
The Beijing branch of China’s securities regulator on Dec. 25 asked Jia to return to China from the U.S. and to deal with LeEco’s debt problems. He subsequently said his wife and brother would act on the matter on his behalf.
After the LeEco crisis broke out at the end of 2016, the brand and image of the TV unit was severely damaged, creating a cash-flow problem, Leshi said in the Tuesday statement.
The TV subsidiary had revenue of 4.9 billion yuan in the first half of 2017, down by 35% from a year earlier, while its loss increased fivefold to 281 million yuan in the same period.
Contact reporter Coco Feng (firstname.lastname@example.org)
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