Debt-ridden Leshi Internet Information & Technology Corp. faces a looming compulsory delisting as its 2019 business sustained continued heavy losses.
The Shenzhen-listed company, an arm of embattled tech conglomerate LeEco, said Monday it expected to report a net loss for 2019 of about 11.3 billion yuan ($1.65 billion) following a net loss of 4.1 billion yuan in 2018.
The worsening results mean Leshi is likely to be delisted after it formally issues the 2019 results. The company registered negative net assets of 3 billion yuan at the end of 2018. Leshi’s Shenzhen-traded stock was suspended in May 2019.
In its estimate of results, Leshi attributed the widening loss to debt claims related to its sports and cloud service units. The company set aside 9.8 billion yuan for those claims, which are related to its promise to repurchase shares from investors in the two units if they failed to go public within an agreed period.
The once high-flying video streaming site is mired in massive debt woes since its parent LeEco was hit with a cash crunch after years of aggressive expansion. Leshi’s founder and largest shareholder, Jia Yueting, fled China to the U.S. and has not returned since the summer of 2017, leaving behind debts that reached 11.9 billion yuan at the end of 2018. Jia has been blacklisted as a debt defaulter by a Chinese court. In October, Jia filed for bankruptcy in the U.S.
Contact reporter Han Wei (firstname.lastname@example.org)