Leshi Internet, one of China’s largest video-streaming services, disclosed that it must pay back 5.62 billion RMB (about $890 million) by the end of this year. Leshi Internet’s (also known as Le.com) heavy debts stem from a financial crisis at its sister company LeEco, both of which were founded by Jia Yueting. Jia resigned as Leshi Internet’s chief executive officer last year.
That amount represents about two-thirds of the total 9.29 billion yuan (about $1.45 billion) in debt Leshi Internet owes, which it says stems from Jia’s failure to provide funding after borrowing against Leshi Internet shares to fuel LeEco’s overambitious expansion strategy.
Leshi Internet shares resumed trading at the end of January, nine months after the company suspended its stock to review a restructuring plan, but the result has been a massive investor sell-off. Leshi Internet said last week that it expects a loss of 11.6 billion RMB (about $1.8 billion) for 2017 due to the fallout from LeEco’s financial problems.
In an unusual move, Jia was publicly ordered in December by the China Securities Regulatory Commission’s Beijing branch to return to the country and deal with debts owed by LeEco to investors and creditors. His assets were also seized by a Beijing court.
That month, however, Jia took over as chief executive officer of Faraday Future, the electric car startup majority-owned by LeEco, after claiming that he had managed to secure a last-minute $1 billion funding round. Jia is reportedly using Faraday Future as a reason not to return to China, despite signs that the company, which once positioned itself as a Tesla rival, is headed toward the deadpool.