December 26, 2017 6:23:10 pm
China’s securities regulator has formally ordered the founder of indebted tech conglomerate LeEco to return to China and sort out a mounting debt pile linked to his firms, ramping up pressure on the head of the embattled entertainment-to-autos group. The Beijing branch of the China Securities Regulatory Commission (CSRC) said in a notice that LeEco Chief Executive Jia Yueting must return to China before December 31 to “fulfil his obligation” and protect investors’ rights.
LeEco, an entertainment, electronics and electric vehicles group founded by Jia, has struggled to pay its debts after rapid expansion into multiple sectors sparked a cash crunch, a plunge in the shares of a listed unit and led to multiple defaults. The watchdog said it had previously asked Jia to return to China in September, but since then had not seen any action taken by the LeEco founder to comply. It did not specify where Jia was, although he has business interests in the United States.
“Firms you control owe huge amounts to listed companies, which has not yet been returned,” the CSRC said. “This behaviour seriously harms the legal rights of listed firms and the personal interests of a wide range of investors.” A spokeswoman for LeEco’s main listed unit Leshi said Jia’s personal behaviour would not have a major impact on the listed company’s overall operations and his ties with the firm were no longer that close. Jia stepped down as CEO of Leshi in May, but remains the head of parent LeEco.
Reuters could not immediately reach Jia for comment. Earlier this month, Jia was placed on an official blacklist of debt defaulters, a move taken by Chinese courts to put pressure on people and entities to repay debts. The recent troubles underscore an abrupt fall from grace of one of China’s most prominent entrepreneurs, who created a tech empire ranging from a Netflix-like online content platform to a smart-car unit looking to rival Tesla Inc.
Jia expanded his business from its video-streaming roots 13 years ago to include telephones, televisions and cars, and had even looked to push into the United States. At its peak, LeEco owed creditors 10 billion yuan ($1.53 billion). Last week, Hong Kong media reported that a local unit of LeEco, LE Corporation Limited, had filed a petition to the territory’s high court to wind up the company.
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