Cash-strapped LeEco plunged deeper into crisis as the Shanghai High People’s Court froze 519 million Leshi shares controlled by company chairman, Jia Yueting, over unpaid debts connected to the firm’s smartphone businesses. The shares frozen this time are worth around RMB 15.927 billion ($2.3 billion), calculated at 30.68 apiece, according to an announcement from the firm.
The amount represents 99.06 percent of the total shares controlled by Jia. It is around 26.03 percent of the company’s total share, the statement pointed out. It has been nearly three months after the company suspended its shares from trading on April 16.
This comes right after RMB 1.2 billion worth of assets owned by co-founder Jia Yueting, his wife Gan Wei and three subsidiaries were frozen earlier this week.
The court carried this order on behalf of China Merchants Bank. However, local media pointed out China Merchants Bank is not the only bank involved. The report noted that LeEco has also borrowed tens of billion RMB from Ping An Bank. In addition, it has two company loans, totaling RMB1.93 billion, due in August and September this year, which means the worst is probably yet to come for the struggling company.
After early signs of trouble started showing up last October, LeEco’s cash crunch has worsened at an alarming speed. Although the company managed to rake in additional funding and Jia also pulled in capital through pledging his shares, the company’s capital chain is still shattering, even the company’s outspoken leader Jia Yueting admits that LeEco’s cash woes are “far worse than expected”.