LeEco founder Jia Yueting to expand share capital of Leshi

PUBLISHED : Monday, 13 February, 2017, 10:11pm
UPDATED : Monday, 13 February, 2017, 10:43pm

Chinese billionaire Jia Yueting has proposed converting every 10 shares in Shenzhen-listed Leshi Internet Information & Technology Corp to 20 shares in an attempt to expand its share capital, the company said in a statement on Monday.

Jia, the founder and controlling shareholder of the company, has proposed converting the listed company’s reserve capital into new shares, it said.

The company will be able to expand its share capital and that would help increase the liquidity of the company’s shares in the market, the statement said.

The plan will also help improve the company’s image and is in line with the development strategies of Leshi, the video streaming business of Chinese internet giant LeEco, according to the statement.

Shares in Leshi rose as much as 1.5 per cent to an intraday high of 36.36 yuan, before settling 0.3 per cent higher at 35.92 yuan on Monday, ahead of the company’s announcement.

The company also said that its controlling shareholders and stockholders who have a 5 per cent stake or more have no plans to reduce their holdings in the next six months.

Leshi’s plan to expand share capital comes about one month after it secured 16.8 billion yuan in funding and investments from real estate developer Sunac China Holdings and other investors.

Sunac said in January that it had agreed to acquire an 8.61 per cent stake in Leshi for 6.04 billion yuan, as well as a 15 per cent stake in LeEco’s film production unit, Le Vision Pictures, for 1.05 billion yuan.

The fund is seen as a lifeline for the cash-strapped LeEco after Jia said in an internal letter in November that the company was rapidly running out of money. He also admitted that the company’s capital structure was weak and that it had expanded at a faster pace than it could raise external funding.

Founded in 2004 by Jia, LeEco has heavily invested in technology products ranging from electric cars to smartphones.