Chinese content and devices company LeEco will sell off minority stakes in three of its businesses to real-estate developer Sunac China Holding to raise CNY15.04 billion ($2.2 billion).
Other Chinese investors will contribute an additional CNY1.8 billion, raising LeEco’s funding to CNY16.8 billion, according to the South China Morning Post (SCMP).
The once fast-rising firm agreed to sell an 8.6 per cent interest in Leshi Internet Information and Technology, its Shenzhen-listed video streaming business, to Sunac for CNY6.04 billion, SCMP reported. Sunac will also acquire a 33.5 per cent stake in Leshi Zhixin Electronic Technology, LeEco’s smart TV subsidiary, for CNY7.95 billion, as well as a 15 per cent stake in Le Vision Pictures for CNY1.05 billion.
At the beginning of the year, reports surfaced LeEco was finalising a CNY10 billion investment from an unidentified strategic investor to shore up its depleted coffers.
The cash-strapped firm, after acknowledging it was expanding “too fast” and its capital and resources were not keeping pace, announced in November it was shifting its strategy away from rapid expansion and named a new head of APAC. It said at the time it lined up $600 million in funding from institutional investors in China.
Last month LeEco said it planned to restructure its once high-flying business following a suspension in trading of its shares on the Shenzhen Exchange after its stock dropped nearly 8 per cent.
Trading in Leshi Internet Information’s shares, suspended on 6 December, was scheduled restart this week.
LeEco was expected to announce major headcount reductions as its takes steps to reduce costs as part of its restructuring to rein in its soaring debt. In December its sports unit, LeSport, said it will cut 10 per cent of its staff of about 1,000 people.
Leshi Internet Information and Technology, best known in China for its streaming video service, reportedly owes about $30 million to Super Sports Media Group, the exclusive holder of rights to broadcast English Premier League football games in China.
Adding to LeEco’s pressure is the reported responsibility of keeping electric car startup Faraday Future alive. While the exact details of the Faraday/LeEco partnership is unknown, it is believed that LeEco has been funding production of Faraday’s launch car, unveiled at CES two weeks ago.