NewLeEco’s cash problems solved ‘once and for all’ says chairman, in wake of 15bn Sunac deal
With a total 16.8 billion yuan capital injection after sale of stakes in various units, chairman is bullish the future is bright
LeEco’s cash problems have been solved “once and for all” for its listed and unlisted businesses, except for its electric cars operation, with the 16.8 billion yuan capital injection from real estate developer Sunac China Holdings and other investors last week, according to the company’s founder and chairman Jia Yueting.
“For so long, LeEco has been fighting alone...Now we got a strong strategic alliance,” Jia told a news conference in Beijing on Sunday, held together with Sunac chairman Sun Hongbin.
Sunac has become the cash-starved business enterprise’s second-largest shareholder after announcing on Friday it has agreed to acquire an 8.61 per cent stake in Leshi Internet Information & Technology, LeEco’s video streaming business, 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.
Sunac also agreed to acquire a 33.5 per cent stake in LeEco’s television hardware subsidiary Leshi Zhixin Electronic Technology for 7.95 billion yuan, bringing the total amount invested by Sunac to 15 billion yuan, according to a filing to the Hong Kong stock exchange.
LeEco received a further 1.8 billion yuan from other investors.
I have consulted with many business associates before the deal. Many tried to dissuade me. But their arguments were not strong enough to change my mind. I don’t think they know LeEco very well
The business has been seeking external funding after Jia revealed in early November that the company with sprawling businesses, many unprofitable, was rapidly running out of money.