Pressure piles on China's LeEco as bank seeks to have assets frozen

Coolpad

04/07/2017 08:09

* China Merchants Bank says applied to court for asset 
freeze 
    * Assets of LeEco, CEO worth $182 mln frozen - media reports 
    * Asset freeze move is over loans to smartphone 
business-LeEco 
 
    By Jess Macy Yu and Shu Zhang 
    TAIPEI/BEIJING, July 4 (Reuters) - Chinese tech group LeEco, 
which has interests ranging from smart cars to online content, 
is facing growing pressure from its creditors and business 
partners, with one bank wanting some of its assets frozen by a 
Shanghai court over late payments. 
    The latest financial woes have surfaced days after its 
founder and CEO Jia Yueting said the conglomerate's 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.  urn:newsml:reuters.com:*:nL3N1JP3F1 
    China Merchants Bank Co Ltd  600036.SS  said in a statement 
on Tuesday 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  2369.HK  and 
its core listed smart TV unit Leshi Internet Information and 
Technology Corp  300104.SZ , has been battling huge financial 
pressure since Jia admitted last year the company had expanded 
too fast and was facing "big company disease".  urn:newsml:reuters.com:*:nL4N1D83OU 
    Several local media outlets this week reported CMB's 
Shanghai branch had successfully applied for an asset freeze 
against some of LeEco's subsidiaries, Jia and his wife, 
totalling 1.237 billion yuan ($182 million). 
    Reuters could not immediately confirm if the Shanghai court 
had approved the asset freeze.  
    CMB  3968.HK  did not comment further on the details. 
    A LeEco spokesman said CMB's asset-freeze application 
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 added. LeEco also hopes to 
raise further cash to help the firm "get back to normal", the 
spokesman said. 
    In 2015, CMB agreed on 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. 
    Some other partners and suppliers are re-examining their 
exposure to the troubled group. 
    This week, local media reported an affiliated company of 
electronics manufacturing giant Foxconn divested its 20 percent 
stake in LeEco's TV and video unit Leshi Zhixin, a blow to the 
company's core business and one of its most profitable units. 
Foxconn did not reply to Reuters' request for comment.  
    LeEco is also facing pressure from China Mobile  0941.HK  
over late payments of around 14 million yuan, a person with 
knowledge of the matter said. The carrier declined to comment. 
    In June, Taiwan's Compal Electronics Inc  2324.TW  reduced 
shipments to LeEco, and temporarily suspended its plans to buy 
shares of Leshi Zhixin, according to local media. At Compal's 
first quarter investor conference, it said it was monitoring 
Leshi's repayment abilities and would develop a new strategy to 
collect its debt, which could involve legal action. 
    Compal did not provide immediate comment when contacted by 
Reuters. LeEco did not reply to Reuters' requests for comments 
on its business partners' actions. 
    Faced with the worsening cash crunch, LeEco has put some of 
its global properties for sale, cut staff numbers, and is 
planning a restructuring to fold some business units into Leshi 
Internet.  urn:newsml:reuters.com:*:nL4N1IP25C  urn:newsml:reuters.com:*:nL3N1HS06N  urn:newsml:reuters.com:*:nL3N1JP3F1 
($1 = 6.7986 Chinese yuan renminbi) 
 
 (Reporting by Jess Macy Yu in TAIPEI and Shu Zhang in BEIJING; 
Additional reporting by Sijia Jiang in HONG KONG; Editing by 
Adam Jourdan and Muralikumar Anantharaman) 
 ((JessicaMacy.Yu@thomsonreuters.com; +886 2 2500-4882;)) 
 
Keywords: LEECO MANAGEMENT/