HONG KONG -- Chinese smartphone manufacturer Coolpad Group plunged Monday in the market here on word of a cash crunch at Le Holdings, parent of top shareholder Leshi Internet Information & Technology, better known as LeEco.
Coolpad shares sank 25% to a low of 98 Hong Kong cents before closing at HK$1.08, a 17% drop.
Jia Yueting, founder and chairman of Le Holdings, sent employees an email warning that the company faces financial problems that could affect subsidiary businesses, according to media reports Monday. Jia also said he would reduce his annual salary to 1 yuan indefinitely. The company owes more than 10 billion yuan ($1.47 billion) related to its accelerated investment in electric cars, Jia said.
The LeEco group increased its stake in Coolpad to 28.9% in mid-June. Market expectations for the smartphone maker rose when Jia took over as chairman and CEO in early August.
LeEco shares sank nearly 5% Monday in Shenzhen.