Leshi Founder Ordered Back to China to Deal With Financial Woes

• December 26 2017

China’s stock regulator issued an order late Monday for Leshi founder Jia Yueting to return to the country before the end of the year to deal with the company’s financial woes.

China’s stock regulator issued an order late Monday for Leshi founder Jia Yueting to return to the country before the end of the year to deal with the company’s financial woes.

The Beijing branch of China Securities Regulatory Commission said that despite repeated calls from the regulator, the founder has yet to show up and deliver on his promise to provide interest-free loans to the Shenzhen-listed Leshi Internet Information & Technology Corp. mired in "huge amount of debt." The CSRC has been pushing for Jia’s return since September.

"The debt has yet to paid back," the agency said in a statement. "It has severely hurt the interest of the listed company and investors and has had an extremely adverse social impact."

Jia made his fortune at Leshi with a video-streaming service similar to Netflix, but he borrowed heavily against his shares in the company to expand into new ventures, including smartphones and electronics. He’s more recently shifted his focus to making electric cars and has been struggling to raise capital to fund the venture, Faraday & Future Inc.

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In a statement issued by Leshi in October, it said Jia had promised in 2015 to make two interest-free loans payable in ten years or more worth a combined total of 5.7 billion yuan ($872 million), while his sister Jia Yuefang had agreed to make loans valued at 1.7 billion yuan. Trading in Leshi shares has been halted since April.

— With assistance by Dong Lyu