Tencent Technology News, February 8 evening, LeTV released a notice, risk warning.
LeTV main notice in the list of the following risks:
(1) The actual controller of the company may change the risk
Up to now, Jiayue Ting holds 102,426.66 million shares of the company, accounting for 25.67% of the total share capital, of which 1,019,539,800 shares have been pledged to financial institutions and 1,024,266,600 shares have been frozen by the judiciary such as the Third Intermediate People's Court of Beijing.
Jiayue Ting equity pledges exist because of the timely additional guarantees and the risk of disposal by the relevant agencies, which may result in changes in the actual controller of the company.
(2) There is a risk of recovery of some related party receivables
Since 2016, the Company has formed a large amount of related receivables and prepayments by way of capital transactions such as sales of goods, provision of services, and other business operations to its related parties controlled by Jiayue Ting. As of November 30, 2017, the balance of related-party arrears to listed companies reached RMB 7,531,410,800.
Although the Company is actively collecting the debts of the above related parties, there is still a risk of recovery. Up to now, some of the Company's related accounts receivables have not yet been recovered, the company has emerged a large number of suppliers to the upstream unable to pay, a large number of debt default and litigation issues.
If the above receivables have large-scale recovery difficulties, the Company's cash flow will be extremely tense and the corporate credit system will be endangered. As a result, the financing channels will be sluggish which will adversely affect the operation of the Company.
The management of the company has realized the seriousness and urgency of the problem. If there is no new capital entering, the company will face the difficult operation problem.
Based on the above, the shareholder of the Company, Tianjin Kairui Huixin Enterprise Management Co., Ltd. (hereinafter referred to as "Tianjin Jia Rui") injected 1.79 billion yuan of funds into the listed company by means of borrowing, to a certain extent, relieved the funds of the Company and its subsidiaries Demand pressure.
(3) Jiayuenting, Jia Yuefang risk of the company's cash flow is not fulfilled due to the failure to fulfill the loan commitment
At the end of 2014 and May 25, 2015, the Company received Notice of Share Reducing Plan sent by Ms. Jia Yuefang and Mr. Jia Youting respectively, and both promised to lend the company all or part of the funds they obtained from the Lotte Shares Working capital usage. The loan will be used for the day-to-day operation of the company. The company may withdraw the loan according to the liquidity requirement within the prescribed time limit. The loan term shall not be less than 60 months and shall be exempt from interest.
In December 2014 and February 2015, Ms. Jia Yuefang and the listed company respectively signed the "Loan Contract", with a total committed loan of not less than RMB1.678 billion. In June and November 2015, Mr. Jia Yunting and the listed company respectively signed the "Loan Contract ", The total commitment to borrow not less than 5.7 billion yuan. Up to now, Mr.Jia Yueting balance of loans to the company is 0 yuan; Ms. Jia Yuefang loan balance of the company is 11.0095 million yuan.
This breach of promise directly or indirectly led to a serious shortage of working capital arrangements for the Company. The Company's cash flow was tight and its business deteriorated continuously, which in turn triggered a series of debt default and litigation risks.
(4) the company's existing debt matures lead to the company's cash flow further tense risk
The main cash source of the Company's operation is the financing channels of corporate members, TV sales, advertising and other business receipts, as well as bank borrowings and external borrowings. Changes in the Company's market environment and the impact of unlisted operations led to a corresponding adjustment in the Company's business scale and a decrease in business income. At the same time, the decline in business scale led to the tightening of bank credit lines and the Company's risk of further tightening of cash flow due to debt maturity.
As of December 31, 2017, the Company had a total of RMB9,288 million of financing loans and loan-type liabilities, of which RMB6,619 million will expire in 2018. If the company's business scale can not be back to a higher level, the line of credit recovery, the company will be further strained cash flow caused the company debt pressure.
(5) There is a risk of material uncertainty in some of the company's business performance
As of December 31, 2016, there were RMB4,784,283,900 accounts receivable in the advertising business of the Company. It is expected that there will be uncertainty in the recovery of some of the accounts receivable. If the accounts receivable after the audit of this part of the bad debts, the company's advertising business performance will have a certain impact.
In addition, due to the rapid growth of traffic demand of LeTV Cloud Computing Co., Ltd. (hereinafter referred to as "Cloud Computing"), the cost has risen substantially. In the current situation of rapidly changing business scale, cloud computing costs can not be accurately identified and adjusted accordingly, which will exert greater pressure on cloud computing business performance.
The above factors lead to significant uncertainties in the performance of the Company's related businesses.
(6) the company's foreign investment risk
In March 2016, the Board of Directors reviewed and approved the proposal of setting up Shenzhen Le Shi Xin Gen Merger Fund Investment Management Enterprise (Limited Partnership) (hereinafter referred to as "LeTV M & A Fund" or "Fund"). The purpose of establishing this fund is to focus on the investment opportunities of the related companies in the upstream and downstream of Lessee Eco-Industrial Chain, to serve the growth of LeTV ecology, promote the value creation and layout of LeTV Ecology as well as the eco-related content industries and fields.
On April 12, 2016, the 2015 Annual Shareholders' General Meeting of the Company considered and approved the "Proposal on Providing Repurchase Guarantee for the First Fund Raised for LeTV M & A Fund", and the LeTV M & A Fund initiated the establishment of M & A fund with a total scale of RMB 10 billion. The first phase About 4.8 billion yuan, of which less than the share of about 1 billion yuan, the sub-share of about 600 million yuan, the priority share of about 32 billion yuan, in order to ensure the successful acquisition of music and M & A funds and follow-up business, the company, Mr. joint joint venture for the music acquisition fund a raised funds principal and expected proceeds to provide repo joint guarantee is expected to assume responsibility for the guarantee of 50 billion yuan, which includes the middle level and priority 15% yield commitment.
Up to now, the fund a total investment of 4.349 billion yuan, of which less than the level of 1 billion yuan share, the secondary share of 600 million yuan, the priority share of 2.749 billion yuan. Since 2016, the fund has invested in such projects as TCL Multimedia Technology Holding Co., Ltd., Coolpad Group Co., Ltd., LeTV Creative Technology (Beijing) Co., Ltd., Shenzhen Super Duowei Technology Co., Ltd. and Shenzhen Huixin Bridge Internet Financial Technology Service Co., Ltd. , With a total investment of 3.425 billion yuan. At present, investment projects have book losses, project closures and other issues, the fund has the risk of loss.
The Fund assumes responsibility of guarantee by Jiayuenting and LeTV Holdings. LeTV takes responsibility for the joint guarantee. If there is a serious loss in the fund as a whole, the Company may face substantial loss of profit level and cash flow due to its joint and several liability. As of June 30, 2017, the actual guarantee amount of the Company was RMB5,006.8 billion.
(7) the use of raised funds to change the risk
During the period from August 2016 to November 2016, when the Company purchased the copyright from the seller of copyright through the use of funds raised by Tibet LeTV, some of the film and television productions that are subject to the purchase of copyright have been deferred or partially contractually terminated for regulatory reasons, actor changes, etc. To be changed to re-enter the negotiation period, resulting in delayed payment. The above withdrawn raised funds have not been transferred back to the Ping An Bank account. They are successively transferred into LeTV account by Tibet LeTV, which is used to replenish the liquidity of listed companies such as employee's salary and tax settlement. The proceeds involved in the above issues totaled 881,020,000 yuan. Before the end of 2016, as a result of the above copyright negotiations, it was determined that procurement could not be resumed within a short period of time. Tibet LeTV transferred a total of RMB881,020,000 back to Ping An Bank's special account.
After disclosure of the matter on April 20, 2017, the Company promptly communicated with the regulatory authorities and took active remedial measures: The 37th meeting of the 3rd Board of Directors of the Company was convened to discuss and approve the proposal of "Temporarily Supplementary Mobility by Using Idle Raised Funds" Funds Proposal ", supplemented and fulfilled the procedures of raising funds to replenish working capital, submitted the aforesaid use of idle raised funds for temporary replenishment of working capital to the Board of Directors for consideration, and the independent directors, the board of supervisors and the sponsor express their firm opinions.
Although the Company promptly reversed the funds raised and took remedial and corrective measures, and educated the Company's internal staff, there is a risk that the Company may face penalties because the Company will raise funds to replenish its liquidity after failing to fulfill the corresponding review procedure .
(8) The risk of pledging the equity of a subsidiary and guaranteeing it externally
On November 21, 2017, the Company released the Announcement on the 50th Meeting of the 3rd Board of Directors. The board of directors of the Company unanimously approved and passed the "Proposal of LeTV Network Information Technology (Beijing) Co., Ltd. to Tianjin Jia Rui Huixin Enterprise Management Co., Ltd. to apply for a loan of 1.29 billion yuan and the Proposal on Providing Debt Guarantee and Related Guarantee for the Company's Borrowings. Related Directors Sun Hongbin and Liu Shuqing abstained from voting and independent directors issued prior approval opinions and agreed Independent opinion.
The borrowings and provision of counter-guarantees mentioned above were made by the Board of Directors and management of the Company based on the fact that the Company's current capital position has been unable to support its daily operating expenses. At present, there are a large number of related party accounts receivable failed to recover, the major shareholder promised not to place the company's borrowings, business operations outside the system, the impact of the brand led to the company difficult to apply for new loans and the extension of existing financial institutions and other issues, the above Problems led to the company's financial position has been unable to support the day-to-day operating expenses, business operations unsustainable. The company expects to pass this loan, counter-guarantee motion reached, in order to continue the company's business.
The Company holds the guarantee of the subsidiary's shares or the counter-guarantee. At the same time, the subsidiary of the Company, as the subsidiary of the Company, provides the counter-guarantee for the equity of its subsidiary for LeTV. If the debts can not be repaid due, The repayment of debts on time, the repayment of debts by the company or the insolvency of the guaranty assets results in the risk of being disposed of according to law.
In the meantime, the Company will also try to handle relevant debts or guarantees through disposing of other assets such as fund-raising and repayment, loan renewal and debt restructuring. However, if the Company can not raise funds by other means or reach the repayment delay and debt restructuring, the Company will face The actual controller of a subsidiary is subject to change.