LeEco subsidiary Leshi Internet Information & Technology has canceled its 200 billion yuan (around $294 million) bond fundraising initiative that was filed in September last year. The listed arm of the Chinese multinational said at that time that its working capital would be increased with the income made from the bond issues. However, when posting the company’s latest update about the fundraising move to the Shenzhen Stock Exchange, Leshi declined to explain why the plans are being terminated. Similarly, executives from the LeEco listed unit have not commented on the matter, although the news follows questions about the financial health of the company by Chinese regulators. Prior to the cancelation of the bond sale there had been three information requests from auditors who also asked how any company restructuring would affect the solvency of the bonds.
Leshi’s main business is a video streaming service similar to Netflix, and just last month, LeEco founder Jia Yueting resigned his position as CEO of Leshi, as did the company’s chief financial officer Yang Lijie. Former Lenovo executive Liang Jung and Zhang Wei then took those positions respectively, although Jia did stay on as chairman. Shortly afterward, there was news that parent company LeEco was laying off around 70% of its workforce in the US, which immediately led to hundreds of workers in Santa Clara and San Jose being laid off. The move to rationalize global operations was made to address the company’s cash difficulties that have been reported for some time, with the main cause noted to be rapid expansion with limited capital and resources over too short a space of time. As well as smartphones the company’s product list has spread to smart TVs, smart bikes, and electric cars.
LeEco’s struggles have mounted over recent times and in January Chinese manufacturer Zhejiang Haosheng Electronic Technology sued the company over unpaid bills. In April LeEco then pulled out of the planned acquisition of US TV manufacturer Vizio, and more recently it was reported that Chinese ad agency Jinyuan Technology is to sue the company about non-payment of fees to the tune of over 60 million yuan (around $8.8 million). Now, Leshi scrapping its planned bond sale is bound to throw up further concerns about LeEco’s financial position. No doubt there will further news on this over the coming weeks and months.