Jia Yueting’s Le.com shares frozen due to unpaid debts | Digital Asia
Digital Asia News Update
Leshi Internet founder Jia Yueting has seen his fair share of money problems. Since late 2016, his conglomerate LeEco suffered mounting debt after rapid-fire expansion, leading Jia to step down from his position of CEO. In July of this year, LeEco sister company Leshi – also known as Le.com – announced that it was at risk of being delisted from the Shenzhen Stock Exchange due to recent losses.
Although he no longer heads Leshi, as of October 26 Jia still held over 999 million company shares, making up more than 25% of total stock. However, according to a recent notice posted to the Shenzhen Stock Exchange website, a Chinese court has ordered all of Jia’s Leshi shares to be frozen. In addition, 5 million shares that Jia pledged to Orient Securities have been released due to an unpaid debt.
The notice is an official announcement from Leshi that contains text of an email written by Jia. Jia’s five million shares, making up about .13% of total company stock, were pledged to Orient Securities in July 2014. The former Leshi CEO received RMB 200 million in return, which was used as floating capital for the company.
Because the sum wasn’t paid back in time, Jia’s pledged shares were released by court order on October 26 of this year. 3 million shares have been “dealt with” by the court, with the money from sales going towards Jia’s debt.
According to his email, Jia wasn’t notified of the court decision immediately and couldn’t give advance notice to Leshi.
In its closing paragraphs, Leshi states that some 869 million of Jia’s shares, close to 22% of the company total, had been pledged prior to the court decision. Due to the high volume of pledges and the frozen status of Jia’s shares, the company warns that control of Leshi may shift to another stockholder: Jia may not have held a majority of stock, but he was previously the company’s biggest shareholder.
The recent announcement was only the latest in a series of unfortunate events for Leshi. In August 2017, a Beijing court froze RMB 250 million in assets belonging to both the company and Jia Yueting. Later that year, the former Leshi and LeEco head was blacklisted by the government for defaulting on loans, then banned from luxury air and train travel for a year starting this past June.
After stepping down from his former companies, Jia has since moved on to US-based electric car startup Faraday Future, which has suffered its own financing issues and recently filed for arbitration over a deal with Evergrande Health.