The listed arm of troubled Chinese tech company LeEco held a general stakeholders' meeting in Beijing which only lasted 15 minutes on Monday, amid protests from suppliers over the company's financial difficulties.
No new chairman was elected to replace founder Jia Yueting, and some high profile rivals even compared the company structure to that of a Ponzi scheme.
Leshi Internet Information & Technology Corp. called the meeting after Jia resigned the chairmanship of the cash-strapped firm to focus on LeEco's car business.
Leshi's shareholders meeting in Beijing on Monday, July 7, 2017. /CFP Photo
Several proposals were reviewed, including that Leshi stock resumes trading. Some stakeholders inquired why Leshi had suspended trading for such a long time, with representatives responding that company stakeholders and high-ranking officials had made big changes, with more ahead.
Sun Hongbin, Liang Jun and Zhang Zhao were appointed as non-independent board directors earlier on Monday.
Creditors add to chaos
Suppliers of LeEco's products gathered outside the meeting hall, demanding payment of money owed. The suppliers held signs asking the company and Jia to return funds. One of the signs read: "LeEco: Give us back our money, and Jia Yueting: Come face us."
Creditors also held signs saying "Loans owed by LeEco should be paid back by LeEco!" These suppliers claim they have been selling LeEco electronic products and accessories without getting paid. According to Yicai, a business media group, the total loans owed to vendors amount to over 600 billion yuan (88.6 billion US dollars).
Suppliers who sell LeEco's products held signs saying "Loans owed by LeEco should be paid back by LeEco!" /CFP Photo
Over the past months, the company has suffered rising costs, financial constraints and brand damage. Leshi announced it expects to log a net loss of around 640 million yuan (94.5 million US dollars) for the January-June period, compared to a net profit of 284 million yuan (42 million US dollars) a year earlier.
Jia Yueting suddenly announced on July 6 that he was stepping down as chairman of LeEco's listed arm Leshi and leaving the board, despite mounting debt problems.
A Shanghai court froze 1.237 billion yuan (182 million US dollars) linked to Jia, his wife and his companies, as a local bank sought asset preservation after LeEco failed to pay interest on its loans.
Jia admitted during LeEco's annual shareholders meeting last June, before he fled the country seeking funds for his automobile affiliate, that the company's cash problems are far worse than expected.
Earlier this year, Chinese property developer Sunac agreed to invest 15 billion yuan (2.21 billion US dollars), including nine billion yuan (1.33 billion US dollars) into LeEco's non-listed entities.
Sign reads: "28 grassroots workers who worked in stores selling LeEco's cellphones demand their hard-earned money." /CFP Photo
Co-founder of Tencent, another technology giant in China, Zeng Liqing, posted a WeChat message saying that LeEco is in fact a Ponzi scheme, according to a screenshot that is circulating online. Tencent's Pony Ma and angel investor Xu Xiaoping both clicked the like button.
"If you haven't realized such an obvious trait of a Ponzi scheme, you neither deserve to be in China's PE circle, nor are good enough to be a start-up founder."
However, Weibo users noted that Tencent is Leshi's competitor not only in the video-streaming market, but also in the technology industry.
File: Sun Hongbin, chairman of Sunac China's Holdings Ltd. /CFP Photo
The next chairman of LeEco?
The Paper.cn reported on Monday that Leshi will decide its new chairman in the next three days.
Many speculated that Chinese real estate developer Sunac China Holdings Ltd's chairman, Sun Hongbin will become LeEco's chairman. Political and economic magazine Caijing published an article, saying "There are three days until Sun take charge of Leshi."
Sunac has stakes in several of LeEco's affliates, and invested 15.04 billion yuan (2.2 billion US dollars) in LeEco in January. A total of 6.04 billion yuan of that investment was for an 8.61-percent stake in Leshi Internet Information and Technology Corp., and 1.05 billion yuan, a 15-percent stake, went to LeEco's film production company Leshi Pictures. A further 7.95 billion yuan was spent on a 33.5-percent stake in Leshi Internet's subsidiary Leshi Zhixin, known for its smart Internet TVs.