LESHI Internet Information & Technology, the Shenzhen-listed arm of embattled technology conglomerate LeEco, said yesterday it expects a net loss of 11.6 billion yuan (US$1.83 billion) for 2017, citing a cash crunch at LeEco that hurt its revenues.

The video streaming company made a profit of 554.7 million yuan a year earlier, but has struggled along with its parent company LeEco after an over-aggressive expansion plan left the group cash strapped.

The net loss includes operation loss, bad debt provision for account receivable and provision for impairment of long-term assets, the Shenzhen-listed firm said in a statement.

Leshi attributed its operation loss to the financial strain of related parties, liquidity issues, shrinking advertisement revenue and rising financing costs.

Last year, property developer Sunac China became Leshi’s second-largest shareholder and LeEco founder Jia Yueting subsequently resigned as chairman and CEO from the company but remains its largest shareholder.

Leshi is trying to recover debt owed by Jia. It said last week it is seeking equity stakes in the car businesses of Jia for debt owed by him and his companies amounting to as much as 7.5 billion yuan.

Leshi’s shares plunged by the daily limit of 10 percent yesterday, the sixth consecutive day they have tumbled the maximum allowed since resuming trading a week ago following a nine-month suspension.

LeEco, an entertainment, electronics and electric vehicles group, has struggled to pay its debts after rapid expansion into multiple sectors sparked a cash crunch and a plunge in the shares of Leshi Internet. At its peak, LeEco owed creditors 10 billion yuan.

Struggling to support goals that included beating Elon Musk’s Tesla Motors in premium electric vehicle making, Jia has been trying to ride out the cash crunch by taking measures such as cutting staff numbers and selling assets.

Jia was placed on an official blacklist of debt defaulters in early December, a move taken by Chinese courts to put pressure on people and entities to repay debts, and was ordered by regulators to return to the country before the end of 2017 to address the mounting debt pile linked to his firms.

But Jia defied the order to return, saying he needed to stay in the United States as fundraising for his electric car business was making progress.

(SD-Agencies)