January 8, 2018 / 3:59 AM / 3 months ago

LeEco repays part of China Merchant Bank debt

SHANGHAI (Reuters) - LeEco has repaid HK$807 million ($103.20 million) of a debt owed to China Merchants Bank and will seek to negotiate with the creditor to secure the release of some of its frozen assets, the wife of the embattled conglomerate’s founder said.

FILE PHOTO: Jia Yueting, co-founder and head of Le Holdings Co Ltd, also known as LeEco and formerly as LeTV, poses for a photo in front of a logo of his company after a Reuters interview at LeEco headquarters in Beijing, China April 22, 2016. REUTERS/Jason Lee/File Photo

Gan Wei, who has been entrusted by the founder Jia Yueting to exercise shareholder rights at LeEco’s listed units and to handle asset sales, said on her official Weibo account on Sunday that the debt and interest payments owed to China Merchants Bank had amounted to HK$1.4 billion.

LeEco has repaid part of this debt after selling shares in its smartphone affiliate Coolpad Group, Gan said.

The entertainment, electronics and electric vehicles group has struggled to pay its debts after rapid expansion into multiple sectors sparked a cash crunch and a plunge in the shares of a listed unit - smart TV firm Leshi Internet Information and Technology Corp. At its peak LeEco owed creditors 10 billion yuan.

China Merchants Bank applied in July to have some of LeEco’s assets frozen, saying a LeEco unit, Leview Mobile HK Limited, had been late making interest payments on a loan.

In a letter published last week, Jia referred to the loan as one of the key causes of the cash-flow problems.

“Our next step is to actively seek communication with China Merchants Bank with the hope that we can get some of our frozen assets proportionately released so that we can repay more of our debts. We hereby request China Merchants Bank to understand and support us”, Gan said in the post.

China Merchants did not immediately respond to a request for comment.

Coolpad on Friday said its top shareholder Leview Mobile HK Ltd had reduced its stake to 10.95 percent from 28.78 percent by selling shares to Power Sun Ventures Limited.

Gan also said 929 million yuan worth of assets had been transferred from LeEco’s e-commerce subsidiary LeMall to another of its core listed unit’s Tianjin-based subsidiaries, New Leshi Smart Home, to pay off some debts. The firm said last week that it was trying to get 3 billion yuan worth of funding.

Founder Jia was placed on an official blacklist of debt defaulters in early December, a move taken by Chinese courts to put pressure on people and entities to repay debts, and was ordered by regulators to return to the country before the end of 2017 to address the mounting debt pile linked to his firms.

But Jia defied the order to return, saying he needed to stay in the United States as a fundraising for his electric car business was making progress. He empowered his wife and brother, Jia Yuemin, to act on his behalf.

($1 = 7.8199 Hong Kong dollars)

Reporting by Brenda Goh; Additional Reporting by Shu Zhang in BEIJING; Editing by Himani Sarkar

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