Chinese Internet tycoon and LeEco founder Jia Yueting’s ambition to challenge the likes of Apple and Tesla looks even more in doubt after $182 million of his assets were frozen by a Shanghai court following unpaid loans.
Jia and LeEco came in for stinging criticism from Chinese media Wednesday, which warned that the Internet streaming company and hardware manufacturer was set to fall into further trouble, with the asset freeze as only the beginning.
LeEco’s development “is too big, too quick and too reckless,” Beijing Business Today wrote. “Developing TV [programs and TV sets], mobile phones, [electric] cars and sports programs all consume too much cash at the same time. Not only can the capital not sustain these developments; fractures are inevitable in areas ranging from human resources, technology and management.”
According to the official Xinhua news agency, the Shanghai High People’s Court last week ruled in favor of China Merchants Bank’s application to freeze $182 million in assets belonging to Jia, his wife and three LeEco affiliates.
On Tuesday, LeEco’s Shenzhen Stock Exchange-listed arm, Leshi Internet Information & Technology, announced that the 26.03% stake of the company held by Jia and related parties had been frozen for a three-year period.
LeEco did not respond to requests for comment.
China Merchants Bank told reporters that it had no option but to file suit in the Shanghai court as LeEco had failed to repay loans given to its subsidiary Leview Mobile. In 2015, the bank’s Shanghai branch signed a strategic collaborative agreement with LeEco offering a line of credit to LeEco and its subsidiaries worth 10 billion RMB ($1.5 billion).
LeEco’s financial troubles have been snowballing since the end of last year. During a shareholder meeting at the end of June, Jia acknowledged the company’s financial difficulties.
“The cash problems at the non-publicly traded businesses are more serious than when this crisis erupted. Our businesses are constantly using cash to repay loans, having a huge impact on their operations,” he said, according to a transcript of the meeting.
Jia, one of China’s most high-profile tech personalities, was named by Forbes as the country’s 37th richest person, with an estimated net worth of $4.5 billion last year. As of Wednesday, his net worth had plunged to $3.6 billion, Forbes said.
In May, he stepped down from his position as CEO of Leshi Internet Information & Technology, the company’s listed arm, but remains chairman and CEO of LeEco.
Under Jia’s leadership, LeEco expanded ambitiously into TV production, mobile handsets and electric cars. In 2015, it was reported that LeEco, previously known as LeTV, paid $400 million to secure the rights to English Premier League for just Hong Kong, whose population is only about 7 million. The following year, LeEco also signed a Hong Kong broadcast deal with the NBA for an undisclosed sum.
LeEco also ventured into the film business with the launch of Le Vision Pictures, which has been involved in productions such as “The Great Wall,” directed by Zhang Yimou. The company acquired Adam Goodman’s Dichotomy last September.
The New York Times reported that LeEco has borrowed $6 billion from various sources and investors to finance its expansion since the beginning of 2016. But LeEco’s incapability to repay the loans became obvious when it had to give up the broadcast rights to the English FA Cup final to Hong Kong domestic broadcaster TVB in May.