Leshi Internet Information and Technology (LeEco, 樂視) is trying to resolve a dispute with one of China’s largest banks over unpaid interest on debt, a spat that has prompted a Shanghai court to freeze 1.24 billion yuan (US$182 million) of assets held by the tech conglomerate and its billionaire founder, Jia Yueting (賈躍亭).
The ailing firm’s disagreement with China Merchants Bank Co (招商銀行) arose over loans to a smartphone subsidiary called Leview Mobile (樂風移動), both companies said separately yesterday.
That unit ignored several requests for interest payments, the lender said.
It eventually went to a court in Shanghai, which then ordered the freeze on assets held by three LeEco affiliates, Jia and his wife, according to Xinhua news agency.
LeEco is now in negotiations with its creditor and has enough capital to service its debt, it said in an e-mailed statement.
Merchants Bank said the court’s decision had since brought business risks under control, without elaborating.
“The bank does not rule out the possibility of solving this issue through friendly negotiations with LeEco,” it said in an e-mailed statement provided by a representative.
Jia is fighting to revitalize a conglomerate he once portrayed as superior to Tesla Inc and Apple Inc, but is now grappling with a cash squeeze after expensive forays into cars and smartphones.
Jia has been forced to slash costs and employees, and has mentioned plans to sell assets to address the crunch.
The Shanghai court’s freeze took effect on Thursday last week and is to last three years till June 2020, Xinhua cited the court document as saying.
LeEco has been trying to come to terms with a larger than anticipated debt burden.
Jia expected 9 billion yuan to be enough to solve its funding issues last year and managed to raise 9.7 billion yuan, he told shareholders in a transcript supplied by LeEco.
Instead, he and the company jointly paid off about 15 billion yuan in debt that year.
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