Sunac chief becomes chairman of troubled LeEco unit
Sunac China chairman Sun Hongbin has officially been appointed as the new chairman of the listed arm of LeEco, the embattled Chinese tech group that is facing mounting debt and losses.
Sun, the Shanxi tycoon who poured 15 billion yuan (US$2.2 billion) to bail out LeEco early this year, has replaced the group’s founder, Jia Yueting, as chairman of the Shenzhen-listed Leshi Internet Information & Technology Corp.
Sun has been chosen to take the position in a board meeting held via teleconference on Friday afternoon, Leshi said in a statement, despite Sun’s disinterest in the role.
“Leshi is small business, while Sunac is a big business worth hundreds of billions of yuan,” Sun was quoted as saying in an interview last week with the mainland media, indicating his reluctance to lead the tech group.
On Wednesday, Sun inked a deal to spend 43.8 billion yuan to buy 13 tourism-related projects including theme parks from Wanda Group, in one of the largest property transactions in China.
“But no one is a better candidate than Sun for the chairman role,” said Hu Jiaming, a Shanghai-based analyst with Capital Securities. “With him being the new chairman, there is possibility for Leshi to get further capital injection from Sunac,” he added.
The appointment of Sun came at a critical time for Leshi, as Jia resigned from the company’s board in early July amid challenges hitting his cash-strapped LeEco group.
LeEco, once a high-flying technology empire, is battling to stay afloat amid a mountain of debt, huge losses and court orders that had freezed its assets.
The crisis has spilled into Leshi, which said on Tuesday that its shares would remain suspended for another three months.
Leshi’s first-half loss is estimated to be between 636.7 million yuan and 641.7 million yuan, swinging from a profit of 284.4 million yuan in the same period last year, according to an early filing to the Shenzhen stock exchange.
It attributed the loss to declines in customer loyalty, advertising revenue, terminal sales and membership fees.