LeEco chairman admits that cash problems are dire and fundraising hasn't been enough.
Jia Yueting, LeEco's founder and chairman, and the only named investor in sister company Faraday Future, came clean recently. He explained that funds raised recently to keep LeEco afloat aren't amounting to enough to make a difference. He told parent-company Leshi Internet Information & Technology Corporation shareholders (via Reuters):
"We had thought some 9 billion yuan for the non-listed units would have been able to solve all the problems, the result obviously did not meet our expectations."
Leshi started as an internet-based company much like Netflix, but from it spawned a major business empire with fast plans in the electric car segment. Faraday Future was a product of the same relationship, and touted itself as a Tesla killer. However, since then, there have been a wealth of issues with both companies. While vehicles have debuted, and dirt was moved, neither has yet amounted to much of anything else.
Jia told the media earlier this year that the cash problems would come to an end. Apparently, Chinese developer, Sunac, was to funnel 15 billion yaun ($2.21 billion), which included a plan for 9 billion yuan to go toward LeEco's non-listed entities. As far as reports show, the money came through, but the situation was so bad that it didn't make a dent. Yueting recently shared:
"Since October, we took some measures and made some mistakes, but LeEco's non-listed units' finances got tighter. This is what we discovered over two-to-three month."
Jia explained that LeEco will need to crunch even further over the next few months and rid of some assets, to bounce back from what he called a "second cash crunch." He explained that the company has already paid back about 15 million yuan, which included loans in Yueting's name.
Needless to say, one cash crunch keeps leading to another, and LeEco's future is looking bleak. However, repaying debts instead of getting in deeper, could be the only solution.
Sister company Faraday Future has undergone its fair share of similar situations. Last we heard, Yueting was done investing in Faraday, but the company had finally hired a new financial manager, with a proven track record. Former BMW CTO, Stefan Krause, has said publicly the LeEco's situation will not affect Faraday Future's operations.