LeEco Defaults on $75 Million Convertible Bond

(Beijing) — LeEco defaulted on a $75 million convertible bond that was due July 7, a bondholder told Caixin, as the cash-strapped Chinese technology company sinks deeper amid mounting debts.

LeEco missed the interest and principal payment when the bond matured, bondholder Shanghai Qicheng Asset Management Co. said. LeEco has proposed deferring the redemption of its bond by another year, or converting the amount owed into preferred shares of LeEco’s unlisted units, such as car-making and entertainment, the bondholder added.

LeEco has had a cash shortage since October following years of aggressive investments to expand its business into smartphones, online video, entertainment and electric cars. Earlier this month, a Shanghai court froze 1.2 billion yuan ($177 million) of assets owned by subsidiaries of LeEco and its founder, Jia Yueting, because of missed loan payments, worsening the company’s cash crunch. On July 6, Jia resigned from all his positions at the company’s publicly listed arm — Leshi Internet Information & Technology.

So far, about 50 private funds have invested in LeEco, which is involved in sports, electric-car and film-production businesses, according to public information from the Asset Management Association of China, a self-regulatory organization for the mutual and private fund management industry. Nine of them are seeking to recoup the investment, according to statements made by fund managers.

Shanghai Qicheng manages an $80 million private fund that invests in LeEco’s convertible bonds. The interest and principal payment on the remaining $5 million convertible bond is due Aug. 17, the bondholder added.

LeEco has said the company and Jia have provided a credit guarantee to the convertible bond.

Contact reporter Dong Tongjian (tongjiandong@caixin.com)