Cash-strapped LeEco's chairman resigns and pledges to repay all debts

Cash-strapped LeEco's chairman resigns and pledges to repay all debts
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 on April 22, 2016.
PHOTO: Reuters

Cash-strapped LeEco's founder Jia Yueting on Thursday resigned from his post as chairman from the firm's main listed unit, LeShi Internet Information and Technology, the company said in an exchange filing.

Jia had already quit as CEO of the Shenzhen-listed subsidiary a few months ago, and now will no longer hold any post with LeShi. He will instead focus on building LeEco's car division, and US start-up Faraday Future and its FF91 electric car, a project he has backed.

Before the resignation announcement, Jia had pledged earlier in the day to take full responsibility and repay all debts.

"I will assume all responsibilities, and will do so until the end for LeEco's employees, customers and shareholders," he said in the open letter.

"Please give LeEco some time, please give LeEco's car business a little more time. We will repay all debts to the financial institutions, suppliers and anyone else we owe."

It is a big promise from Jia, and neither he nor the company have revealed concrete details on how they plan to turn things around.

The Beijing-based company was once a tech darling, starting with online video streaming before quickly expanding to smartphones and electric vehicles, and even launching in India and the US

But the company's fast ascent didn't appear to be fueled by basic business sense, with LeEco spending far beyond its means and failing to replenish its coffers.

The fallout from its cash crunch continued to widen: Earlier this week, 1.2 billion yuan (around S$203 million) in assets owned by LeEco subsidiaries, Jia and his wife were reportedly frozen by a Shanghai court over unpaid debts.

LeEco's woes also scuttled a US$2 billion (S$2.8 billlion) deal to buy US television maker Vizio, hurt other related ventures and led to massive cost-cutting and layoffs. Things got so bad last year that Jia cut his salary to 15 cents.

Shares of LeEco subsidiary, LeShi Internet Information & Technology, have dropped 14 per cent in Shenzhen so far this year, before the stock was suspended from trading as of April 14 amid restructuring efforts.

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