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China's LeEco founder resigns as chair of listed unit after public plea for patience
July 6, 2017 / 5:07 AM / 4 months ago

China's LeEco founder resigns as chair of listed unit after public plea for patience

HONG KONG (Reuters) - The founder of China’s debt-laden LeEco resigned as chairman of its main listed unit on Thursday, just hours after making a public plea for patience amid a deepening financial crisis at the entertainment, electronics and electric vehicles group.

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

Leshi Internet Information & Technology Corp Beijing said Jia Yueting will remain controlling shareholder without any role, having resigned as chief executive in May to focus on the electric car business, of which he will now become chairman.

The announcement came after Jia on social media promised to repay debt and reaffirmed LeEco’s electric car commitment.

“Please give LeEco some time, please give LeEco car some time,” Jia Yueting wrote in Chinese on his Weibo and WeChat accounts. “We will pay back creditors, suppliers and any other debts.”

The plea came about a month after Jia said a cash crunch at LeEco was “far worse than expected”. He previously said the group, whose businesses include telephones, television sets and cars, expanded too quickly from its video-streaming beginnings 13 years ago.

Jia’s resignation is the latest development in a week of turmoil, with asset managers seeking to pull investment after a Shanghai court granted China Merchant Bank Co Ltd’s request to freeze $182 million in assets due to late interest payments.

“Given LeEco’s current state, in order to protect fund safety, we have asked our fund manager to pause new investment and will seek to hasten our exit from invested projects,” Noah Holdings Ltd said in a statement late on Wednesday.

Hengyu Tianze, known as 1314 fund, also in a statement on Wednesday said it had requested to redeem its convertible bonds in a LeEco unit several times since March and had met with Jia on the matter.

Investors were also spooked on Monday after it emerged that China’s national enterprise credit information publicity system showed Jia relinquished his role as LeEco’s legal representative last month in favour of another executive, Wu Meng.

“Resigning as chief executive of LeEco’s listed company and many other roles is all aimed at making the FF91 go into production and hit the market as soon as possible,” Jia said earlier on Thursday, referring to a luxury electric car that LeEco is developing with U.S. startup Faraday Future.

Analysts have said LeEco’s foray into automaking caused its financial troubles, but Jia said LeEco remains committed.

“Our dream to revolutionise the auto industry cannot be defeated, however big a bank run,” Jia said, using Chinese characters that mean both “bank run” and “jibe”.

Reporting by Sijia Jiang; Editing by Christopher Cushing

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