Struggling to tackle mounting debt, Jia Yueting, founder of the Chinese tech group LeEco, is selling most of his stake in the group’s LeSports unit to a new consortium, as Tencent Finance reports.
Jia current holds a 30.66 percent stake in LeSports. The new consortium, formed by “several veteran investors”, will replace Jia to become the largest shareholder of the company and revamp the board.
The exact date of the transaction has yet to be confirmed as there are still preconditions that must be met for the equity transfer.
Members of the consortium and the value of the deal were not revealed.
The amount will cover the outstanding debts of LeSports with the balance going to the company’s accounts, according to a person familiar with the matter.
LeSports will revamp its board of directors after the deal, aiming to enhance corporate governance, decision-making mechanism, as well as the management process.
LeSports, China’s leading internet-based sports media company, has spent a lot to acquire exclusive broadcasting rights to top soccer leagues and sporting events, but has failed to generate much return from the business.
The company said it raised 8 billion yuan (US$1.21 billion) in a second round of funding in March last year. However, more than half of the amount was used to finance the group’s unlisted businesses such as smartphone and automobile units.
As a result, LeSports has been facing cashflow problems. It has an outstanding debt of about 2.5 billion yuan after the company paid over 1 billion yuan for online broadcasting rights.
This article appeared in the Hong Kong Economic Journal on Sept. 21
Translation by Ben Ng
[Chinese version 中文版]
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