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China tech

Streaming service Leshi poised for delisting as red ink mounts

Former Chinese tech darling struggles to recover from ill-fated expansion push

A LeEco phone on display during a media event in San Francisco in 2016: Leshi branched out beyond streaming into smartphones.   © Reuters

DALIAN, China -- Foundering Chinese video-streaming company Leshi Internet Information & Technology looks set to be delisted from the Shenzhen Stock Exchange as it nears a key deadline with no path to recovery in sight.

Leshi was suspended from the startup-focused ChiNext board on May 13, 2019, after reporting roughly 3 billion yuan ($423 million at current rates) in negative net assets for 2018. Exchange rules stipulate that the listing must be terminated if the company fails to recover within the following year.

Leshi booked a net loss of 11.2 billion yuan for 2019, its third straight year in the red, and remained in negative territory for the first quarter of 2020. The company previously noted the possibility of a delisting within 15 trading days of April 27.

Chairman Liu Yanfeng said during an earnings briefing Tuesday that Leshi has "no plans to raise capital or refinance debt."

"We will continue making efforts to maintain our operations," Liu said, without offering examples.

Leshi, founded in 2004, rose to prominence on the strength of its mainstay streaming service, particularly for sports programming such as soccer, and later found success selling its own brand of televisions and smartphones. Founder Jia Yueting, once seen as China's answer to Steve Jobs, plotted an expansion into electric vehicles.

But the rush to branch out left Leshi strapped for cash, and its earnings took a turn for the worse around 2016. Jia stepped down as chairman in 2017, though he remains the company's top shareholder with a roughly 23% stake. Liu said Tuesday that Jia will be asked to repay some capital to the company.

Real estate developer Sunac China Holdings, Leshi's second-largest shareholder, has made no mention of plans to provide support to the company.

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