A mysterious trading halt in China is raising concerns about Faraday Future's billionaire backer
LeEco is developing several different businesses at once - including smartphones, internet TVs, streaming content and, more recently, electric cars.
Last month, Business Insider was on-site for the grand-opening of LeEco's first US headquarters, in San Jose, California. Nearly 300 employees work in that office, with space for up to 800.
The company has thousands of employees worldwide.
Just a couple of hours after the ribbon-cutting, the company was reported to be in talks to buy some three million square-feet of land from Yahoo.
CEO Jia Yueting is also one of the investors backing Faraday Future, the California-based electric-car startup that's planning a $1 billion, 900-acre factory in the North Las Vegas desert.
One of the many questions about LeEco, its parent company, Leshi Internet Information and Technology, and CEO Jia is this: how is the company financing its rapid growth?
LeEco went public in China under the Leshi name in 2010, but flew under the radar until the stock popped early last year, The Wall Street Journal reports, making it "one of the most valuable tech stocks listed in China."
In order to finance rapid growth among the many businesses under the Leshi banner, Jia apparently pledged a large portion of his shares in Leshi as collateral for personal lines of credit, according to WSJ writer Li Yuan.
Here's more from The Journal:
Trading in Leshi shares has been suspended since December. The suspension was prompted by Leshi so the company could acquire an ownership stake in its film business, Le Vision Pictures - ostensibly to help grow its streaming content services.
Leshi plans to issue 165 million shares of Leshi at 41.37 yuan per share - about $6.35 US dollars - to shareholders of Le Vision Pictures plus a cash payment of 2.98 billion yuan to finance the deal, the South China Morning Post reported Monday.
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Business Insider obtained a statement from Leshi in March that announced the trade suspension would end on May 7, but now it's unclear when that will happen, according to SCMP, which cited a company filing released Friday.
Since December, Leshi has proposed several deadlines for when trading of the stock it's been using as collateral would resume - all of which have been missed.
According financial documents from Leshi that were cited by The Journal, the company was valued at about $16 billion at its December closing price.
The company is doubling down on its film business because content streaming is a huge part of its broader strategy. Jia told Reuters last month that sales of its movies and TV shows will subsidize the cost of its future electric, autonomous cars, like the concept LeSEE.
"One day, our cars will be free," Jia said.
Because LeEco is a strategic partner of Faraday Future (FF), and Jia said that he is among the investors backing the company, the ongoing suspension - now five months long - has caught the attention of Nevada's state treasurer, Dan Schwartz, who is responsible for overseeing millions of dollars in tax incentives that are helping FF build its factory.
Schwartz has repeatedly raised concerns about Jia's association with FF. Earlier this year, Schwartz traveled to China on unrelated business and attempted to meet with executives at Jia's company, to no avail.
An FF representative reiterated to Business Insider on Monday that Leshi and LeEco's business is separate from that of FF because Jia is backing FF with personal assets. The representative declined to comment on who else, besides Jia, is funding FF but said "our business continues to grow steadily."
For his part, Schwartz says he's not entirely convinced. "We are aware that there are multiple issues ... which bear on the start date of the project," Schwartz told Business Insider in a phone conversation last month. He declined to elaborate on what those issues might be.
Chinese tech companies at large have been making big bets on electric cars lately. The Chinese government in recent years has loosened the rules, allowing the practice. The apparent goal is to hasten the move away fossil fuels that have contributed to China's massive pollution problem.