Sunac extends fresh loans to LeEco companies
Billionaire property magnate Sun Hongbin has come to the rescue of LeEco for the second time this year, providing US$270 million in loans to the internet giant’s video streaming and TV unit on Thursday through his Tianjin-based residential developer China Sunac Holdings.
Sunac will provide Leshi Internet a 1.29 billion yuan loan (US$194.5 million) for general working capital, plus 3 billion yuan of guarantees to cover its existing and new debt, the company said in a filing to the Hong Kong stock exchange on Thursday. In addition, Leshi Zhixin the TV unit, will receive a 500 million yuan loan, the statement said.
Thursday’s announcement reflects the second major investment by Sunac to support embattled LeEco this year. In January the company invested 15 billion yuan in LeEco subsidiaries, including a 8.61 per cent stake in Leshi and a 33.5 per cent stake in Leshi Zhixin.
Sun, chairman and executive director of Sunac, was appointed to take up the top leadership post at Leshi in July after Jia Yueting, its founder and CEO, stepped down from all management roles at the company.
Sunac is the fifth-largest developer in China by sales.
At the time the investments were unveiled in January, Sun said he admired Jia’s entrepreneurship and noted that LeEco’s entertainment assets fit with his own ambitions to expand into the sector.
But the cash injections and corporate restructuring efforts have failed to reverse LeEco’s fortunes, as the company was embroiled in a series of defaults.
Trading in Leshi shares has been suspended since mid-April on the ChiNext board.
In early November China’s securities regulator said it is investigating Leshi Internet Information & Technology Co for suspected fraud involving its 2010 IPO.
Jia said in a recent interview that he was unable to provide further funding in the form of loans, or increase his stake in LeEco related companies.
Despite cascading woes, Sun has publicly defended his firm’s holdings in the company, and said if he couldn’t turn LeEco around, it would be “a regret for his lifetime”.
Thursday’s lending agreement will allow Sunac to increase its stakes in Leshi Investment, LeSports, Chongqing Leshi Microcredit, Leshi Cloud and Leshi Zhixin, all subsidiaries of LeEco, if the borrowers failed to repay the loans.
Sunac’s shares in Hong Kong closed up 2.3 per cent to HK$35.45 on Thursday following the announcement. The stock plunged briefly in early trades, touching a one-month low of HK$33.1, reflecting a 23.6 per cent drop from its highest traded price in the previous month.
Mainland financial website Caixin reported on Wednesday, citing internal sources, that Sun had ordered local related companies to install LeTVs.