LeEco lays off 60 Hong Kong staff in wake of reports of cash crunch
Chinese internet company LeEco has laid off 60 employees in its Hong Kong office as the company looks to restructure and optimise its operations following reports of an impending cash crunch last month.
The news of the retrenchment round comes just weeks after the company said it planned to cut about 10 per cent of its staff at its sports video-streaming subsidiary LeSports. Mainland media reports suggested that the retrenchment number was closer to 20 per cent, or 200 of LeSports approximately 1,000-strong headcount.
LeEco said the retrenchment of staff in Hong Kong was a one-time layoff. Retrenched employees are entitled to receive compensation, according to Hong Kong’s employment policies.
LeEco’s existing businesses and membership services will not be affected by the round of layoffs, the company said.
A spokesperson for LeEco also cited LeEco-Asia Pacific chief executive Anthony Gao Jun, who said in earlier interviews that the company is seeking to better integrate its Asia-Pacific, Hong Kong and LeSports operations to increase operational efficiency.
In November, LeEco chief executive Jia Yueting said in an internal letter to employees that the company was rapidly running out of money as it had expanded faster than it could raise external funding.
Jia said LeEco had a “weak capital structure”, singling out the company’s more expensive ventures such as its car business as one of the reasons for its financial troubles. The company had poured 10 billion yuan into its electric car business unit, he said.
Early this month, LeEco halted trading of shares in its Shenzhen-listed arm, LeShi Internet Information and Technology Corp, prompting market rumours that margin calls on the credit of Jia Yueting and his brother Jia Yuemin had been triggered when the stock fell below 35.21 yuan on December 6.
Jia and his brother have pledged more than 84 per cent of their combined holdings in LeShi as collateral for over 10 billion yuan in loans, according to financial data and analysis platform Wind.
LeEco later issued a notice stating that trading had been halted in LeShi to protect its shareholders’ interests and avoid abnormal fluctuations in stock price following the slew of margin call rumours.
On Wednesday Liang Jun, president of LeEco’s TV arm, told reporters that the company had received a fresh round of funding, although he declined to reveal the investors involved or the total funding amount.
“Our company was valued at over 30 billion yuan before the investment, you can guess how much 5 per cent or 10 per cent would be worth,” he said, adding that more rounds of funding for LeEco would follow.