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July 5, 2017

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Shanghai court freezes LeEco assets over debts

CHINESE tech group LeEco is under growing pressure from its creditors and business partners, with a court in Shanghai ordering some of its assets frozen over late payments to a bank.

The latest financial woes of the conglomerate, which has interests ranging from smart cars to online content, have surfaced days after founder and CEO Jia Yueting said its cash problems were “far worse than expected” and that billions of dollars in funds raised in recent months were not enough to help it ride out the crunch.

China Merchants Bank said in a statement yesterday it had applied to have some of LeEco’s assets frozen because a subsidiary, Leview Mobile HK Limited, had been late on making interest payments on a loan.

“CMB’s Shanghai branch repeatedly urged repayment without success and so sought to use legal means,” the bank said, adding it now had risks related to the loan under control and did not rule out using “friendly talks” to resolve the issue.

LeEco, which controls smartphone maker Coolpad and its core listed smart TV unit Leshi Internet Information and Technology Corp, has been battling huge financial pressure since Jia admitted last year the company had expanded too fast and was facing “big company disease.”

According to a court document dated June 26, the Shanghai High People’s Court approved a freeze order on 1.237 billion yuan (US$182 million) of assets of Leview Mobile HK Limited, two other LeEco-linked firms as well as CEO Jia and his wife.

The court document said it had found CMB’s application to be “in accordance with the law” and that therefore the freeze order ruling would come into immediate effect.

A LeEco spokesman said the case concerned “financing loans related to LeEco’s smartphone business,” but added LeEco had enough collateral to cover the loan.

“Our senior executives are currently in close communication with various financing units of CMB, and we hope to resolve the related debt issue very soon,” he said.

LeEco also hopes to raise further cash to help it “get back to normal.”

In late 2015, CMB agreed a 10 billion yuan loan to LeEco, part of which was used to acquire a stake in Coolpad and was the biggest bank loan to LeEco at the time, financial magazine Caixin said on Monday, citing public information.


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