Beleaguered tycoon puts wife in hot seatTop News | 3 Jan 2018
A tech entrepreneur has defied mainland regulators' orders to return home, writing that his wife and brother will deal with the debt woes plaguing his LeEco conglomerate.
Jia Yueting, the 44-year-old head of an empire that has spanned electric cars and smartphones, posted a letter on social media to the Beijing branch of the China Securities Regulatory Commission, which last week ordered him to return to China before the end of 2017.
The one-time billionaire is believed to be in the United States, attempting to build up his Los Angeles-based electric car company Faraday Future.
He was added to a national blacklist of debt defaulters by Chinese courts last month over hundreds of millions of US dollars in unpaid loans.
"I have entrusted Ms Gan Wei [his wife] and Mr Jia Yuemin [his brother] with full power to exercise my rights as the public company shareholder and fulfill my shareholder responsibilities," Jia wrote on Weibo.
He said Gan and Jia Yuemin would deal with the debt issues of Leshi Internet, LeEco's main publicly traded arm.
On her own Weibo account, Gan said she will meet creditors to resolve the problems.
Gan, 33, an actress and producer on several feature films, said her husband owed 6.9 billion yuan (HK$8.3 billion) in loans connected to pledged shares. He has paid 1.7 billion yuan in interest on loans since 2014, she wrote yesterday.
Leshi's filings show that nearly all of Jia's shares were pledged to back loans, though a Beijing court said last month it had seized more than one billion shares - Jia's entire holding - of Leshi to repay creditors. The court also seized Jia's two homes in Beijing and US$200,000 (HK$1.56 million) from a bank account.
Later, in July, as creditors began to swarm, "the production and operation of non-public companies came to an abrupt halt," he wrote.
"Over 10,000 employees were forced to be dismissed, and the only thing left for the company was to sell its assets to repay the debt."
Leshi Internet had a market capitalization of US$9.4 billion in April last year, but it has suspended trading in its shares since then.
Investment firms have already marked down their holdings. If the company were to delist completely, it could be one of the largest failures of a Chinese publicly traded company - possibly wiping out the investments of its 185,000 shareholders.
Jia in his letter blamed LeEco's woes on one bank which sued him after he was "only a mere two weeks overdue on a 30 million yuan interest payment."
Faraday Future has said it is raising US$1 billion to start production of electric cars.
LeEco has struggled to pay its debts after rapid expansion into multiple sectors sparked a cash crunch, a plunge in shares and led to multiple defaults.