Le Rong’s New Official Solo Flight, How Long Can LeTV’s Empty-shell TV Network Last?

- Dec 20, 2018-

"House seemingly endless rain"! This sentence is believed to be a bit of an exaggeration in LeTV. It is difficult to extricate itself from the debt whirlpool, but now it has to face the fact that Le Rong has made a new solo flight, which is hopeless.


On the evening of the 19th, LeTV.com announced that as Tianjin Jiarui became the first major shareholder of Lerong, LeTV was no longer responsible for the new business policy and decision-making, investment plan, internal management and regulations. With a leading role, LeTV will no longer constitute the actual control of Le Rong.


At the same time, after Le Rong’s new listing, the original hardware-related business income of listed companies will no longer be included in the scope of consolidated statements. Although there are only a few words, you can still feel an indescribable pressure and helplessness between the lines.


So, what is the situation of LeTV?


The fourth shareholder meeting held on November 19, 2018, Lexus Financial Director Zhang Wei said: "The company is now under very tight pressure, and historical issues have not been effectively and timely resolved. Recently, a large number of suppliers have asked the company to go. We pay off a part of the debt. We understand the mood of the creditors very much, and we are also striving to find some solutions, including negotiations with suppliers, policy support, etc. But now the company’s cash flow pressure debts are still not particularly effective and complete, the company is active. Communicate with related parties and pursue the arrears of related parties."


Obviously, the reality of the test for LeTV has not ended, and now seems to usher in a major upgrade. With the core asset of LeTV, the new owner of the music, it can not help but make people curious to be the empty shell of LeTV can support how long?


On the one hand, the withdrawal of the market is a foregone conclusion, and the future is long. According to the relevant provisions of the “Shenzhen Stock Exchange GEM Listing Rules”, if the company's net assets are negative after auditing, the Shenzhen Stock Exchange may decide to suspend its stock listing. As of the end of the third quarter of this year, LeTV's net assets were negative 365 million, with a loss of 1.489 billion. Now, with the new official solo flight of Le Rong, it is an indisputable fact that LeTV's net assets for the whole year are negative. This means that LeTV has already reached the edge of delisting.


On the other hand, Rongchuang affiliated company Tianjin Jiarui debt collection, LeTV.com's new equity ratio to Le Rong or further compression. As far as the current situation is concerned, the shareholder of Lerong Zhixin held by Tianjin Jiarui, which is controlled by Sunac, has risen to 46.0507%, and LeTV has held 36.4046%. But even so, LeTV needs to face the requirements of the company and Tianjin Jiarui to request LeTV to repay a total of nearly 3 billion debts. It is understood that in November last year, Sunac was loaned to LeTV as 1.29 billion by Tianjin Jiarui. The latter was guaranteed by Lerong’s new 13.54% equity pledge; Sunac also provided a 3 billion debt guarantee for LeTV. The company will guarantee a new 26.77% equity pledge guarantee. If LeTV is unable to repay, Sunac is likely to further win a new 30% stake in Lerong, when Sunac will hold more than 70% of its equity.


For LeTV.com, both sides are difficult. One is the debt dilemma, and the other is the edge of the market. It is obviously not much time left for LeTV.