LeEco reassures on supercar dream, fundraising plans
LeEco’s fundraising plans are progressing smoothly and there are no plans to give up on its supercar dream, billionaire founder Jia Yueting said on Sunday, reassuring investors about the company’s capital condition which came under further scrutiny after trading in the shares of its Shenzhen-listed unit was halted last week.
“The supply chain problem [of LeEco’s smartphone business] is being solved gradually, and product supply will return to normal soon ... [the company] is moving forward smoothly on related fundraising plans, and we will make an announcement at an appropriate time,” Jia said at a business forum in Beijing.
Media reports in November said LeEco had defaulted on payments to its suppliers amid a cash crunch which cast doubt on its plan to produce an electric car, a dream that Jia has heavily invested in.
Jia said the plan was going ahead and LeEco will announce substantial progress on its production plant, in Deqing county in eastern China’s Zhejiang province, by the end of this month.
The company announced in August a plan to invest 12 billion yuan in an electric car factory capable of making 400,000 cars a year by 2018.
LeEco is also in partnership to make electric cars in the US with electric car start-up Faraday Future, which was also said to have halted construction of its Nevada factory.
“We and our strategic partner FF [Faraday Future] will demonstrate the revolutionary achievement we have made soon,” Jia said.
LeEco has burned through more than 10 billion yuan on its car investment, putting pressure on the company which is having difficulty raising cash.
Further questions were raised after LeEco’s Shenzhen-listed unit, Leshi Internet Information and Technology Corp, halted trading on December 7.
The suspension came after the company’s share fell to as low as 35.01 yuan over mounting concerns that staff would be laid off to help trim costs. Also that day, several mainland media reports cited rumours among traders that margin calls on the credit of Jia and his brother Jia Yuemin were triggered when the shares slipped below 35.21 yuan on December 6.
Speaking to the public for the first time after the share suspension, Jia Yueting said: “Leshi’s share price drop on December 6 was aimed at interfering with a significant issue we have planned. Trading has been halted, and capital and business consolidations are being planned.”
He did not elaborate on the “significant issue”, but he did defend the company over the recent rumours.
“Over the past month, LeEco has been encircled by various voices, and made headlines in the media almost every day. (Describing us as a) Ponzi scheme, about to go bankrupt ... LeEco has received various sensational labels. I have to thank every one who ‘planned’ all these things behind the scenes. It’s our competitors that put us on the stage – not our friends,” Jia said.