Chinese content and devices company LeEco plans to restructure its once high-flying business following the suspension of trading of its shares on the Shenzhen Exchange after its stock dropped nearly 8 per cent.
LeEco didn’t specify what changes it would make, according to a report in The Wall Street Journal (WSJ). Its Shenzhen-listed unit Leshi Internet Information and Technology Corp was halted from trading on the stock exchange on Wednesday after a sharp drop in its share price reportedly triggered margin calls by brokerages and lenders.
Leshi said in a stock market filing that “the company is in the process of planning major matters, which are expected to involve integration of industry resources. There is still uncertainty around this matter,” the WSJ reported.
LeEco last month announced it lined up $600 million in funding from institutional investors in China and named a new head of APAC as it moved to shift its strategy away from rapid expansion. The move came shortly after founder and CEO Jia Yueting acknowledged that the company has been expanding “too fast” and its capital and resources were not keeping pace, following an aggressive move into smartphones, smart TVs and electric cars.
In a letter to employees, Jia said the APAC appointment reflects its new strategy to put more emphasis on maintaining a healthy cash flow and has “temporarily put a hold on expansion in the Asia-Pacific market”.
LeEco is expected to announce major headcount reductions as its takes steps to reduce costs as part of its restructuring to rein in its soaring debt. Earlier this week its sports unit, LeSport, said it will cut 10 per cent of its staff of about 1,000 people, Reuters reported.
In July LeEco announced a deal to acquire Vizio, a California-based TV manufacturer, for $2 billion, giving it a footprint in North America from which to sell smart TVs. In October it made a number of high-profile hires, such as Danny Bowman, ex-Samsung and Sprint, and Rob Chandhok, ex-Qualcomm.