LeEco founder Jia Yueting ‘cannot keep’ promise of financial support to embattled subsidiary
The former high-flying tycoon suffers a further blow to his prestige after earlier stepping down from top positions in the Chinese group whose rapid expansion had plunged it into debt
The embattled founder of Chinese conglomerate LeEco, Jia Yueting, has told one of the company’s subsidiaries that he is no longer able to offer it financial support as he had previously promised, in a further blow to the image of the once high-flying internet tycoon.
In a statement to the Shenzhen Stock Exchange, Le.com, one of LeEco’s main subsidiaries, said it had received a letter from Jia saying he was not in a position to keep a promise he had made in 2015 to lend the money raised from his sale of shares in Le.com back to the company, interest free.
“I have received notices from the board of Le.com that reminded me to fulfil my promise to either keep lending with the money I got from selling the shares in the company, or to purchase more shares in the company,” Jia was quoted as saying in the letter.
“However, due to a worsening cash crunch faced by myself and the non-listed firms under LeEco since the second half of 2016, I have used all the proceeds I received from selling the shares to repay the debt owed by the non-listed arms and myself.
“I thus now have no ability to fulfil my promise of lending to the company, and neither am I able to buy more shares.”
Although Jia is not in breach of any rules by not offering to lend money, his decision is a blow to his prestige. He has already been forced to step down from all his executive posts at the group he founded, and whose rapid growth he oversaw from its early days as a video streaming service to a conglomerate with interests in smartphones and electric vehicles.
