LeEco admits failure to use funds rightly to turn around business

The billionaire founder of Chinese tech firm LeEco has admitted that the company’s cash problem is “more severe than expected”, after a 16.8 billion yuan (US$2.47 billion) investment secured at the beginning of the year failed to turn the business around.

“The cash problem of our unlisted businesses is far more severe than we expected. The cash situation in the recent months is worse than last year,” Jia Yueting, founder of the Beijing-based LeEco, said on Wednesday.

“We thought that we could use nine billion yuan to solve all the problems. But we made some mistakes and it turns out that it (the money) is not enough,” he said.

Jia’s admission came at the annual shareholders meeting of the company’s Shenzhen-listed arm, LeShi Internet Information & Technology Corp Beijing.

LeEco, with interests ranging from smartphones, televisions to electric cars and entertainment, secured in January 16.8 billion yuan of strategic investments – mostly from Chinese real estate tycoon Sun Hongbin’s Sunac China Holdings. The funds came about two months after Jia admitted that the company faced a cash crunch for “moving too quickly”.

Despite the capital injection, Jia has been struggling to turn the business around.

News reports of LeEco’s Chinese suppliers suing the company for unpaid bills have been non-stop in recent months.