LeTV was criticized by three major funds collectively, and the investment of investors in the private placement may be cut in half

The assets of Jia Yueting and his wife and LeEco have been frozen, the CEO of LeEco Finance has resigned, the LeEco building is full of debt collectors, and Jia Yueting has resigned as the chairman of LeEco.com...

In the past week, LeEco, which has been unlucky, has continued to encounter various new problems and experienced unprecedented disasters. It is no exaggeration to say that after LeEco's financial crisis has fermented wildly for more than half a year, LeEco is now in trouble both internally and externally and is riddled with problems.

Although Jia Yueting admitted at an investor exchange meeting that the funding problem of LeEco's non-listed system is more serious than expected, LeEco's listed unit LeTV.com is not having an easy time as the three major holding funds collectively slashed their valuations during the suspension period. Institutions and individuals who have participated in LeEco's private placement may also face the situation of having their investment "cut in half".

The three major funds collectively lowered LeTV's valuation and set aside three limit downs

On July 8, China Post Fund, Harvest Fund, and E Fund, three funds that hold a large amount of LeTV, announced on the same day that they would reduce the valuation of LeTV's stock by about 30%. At this time, LeTV was still suspended, and the investment institutions' move was tantamount to showing their pessimistic attitude towards LeTV.

Among them, China Post Venture Capital Fund issued an announcement on its official website in the morning of the same day, saying that the fund manager decided to adjust the valuation of LeTV shares held by some of its funds from July 7, 2017. The adjusted valuation price was 22.37 yuan.

It is reported that the share price of LeTV before the suspension (April 14) was 30.68 yuan per share. Based on this calculation, China Post Fund's valuation adjustment of LeTV is equivalent to a 27% discount; in other words, China Post Fund has made provisions for three limit downs.

Subsequently, Harvest Fund also released an announcement on its official website on the same day, stating that from July 7, 2017, the LeTV shares held by its securities investment funds would be valued at 22.37 yuan, which would be reduced by three consecutive 10% based on its closing price on April 14, 2017.

On the same day, E Fund, another public fund that holds a large amount of LeTV shares, also issued an announcement stating that from July 7, 2017, the LeTV shares held by its securities investment funds (excluding exchange-traded open-end index securities investment funds) would be valued at 22.05 yuan.

Why did China Post Fund take the lead in “attacking”?

Interestingly, the three cemetery funds all chose to lower their valuations of LeTV on the same day, and even the extent of the adjustments was highly consistent. Among them, it is interesting to note that China Post Fund was the first to "take action".

It is reported that by the end of the first quarter of 2017, a total of 39 funds under more than 20 public fund companies held LeTV shares. Among them, Zhongyou Fund ranked first with a holding of about 41 million shares and a holding value of 1.39 billion yuan, which can be said to be a "die-hard fan" of LeTV.

According to the announcement released by China Post Fund, there are currently a total of 8 funds under China Post Fund that hold LeTV shares, namely China Post Strategic Emerging Industries, China Post Information Industry, China Post Core Competitiveness, China Post Trend Selection, China Post Exclusive One-Year Fixed Term, China Post Dual Power, China Post Absolute Return Strategy and China Post Core Selection.

However, since LeEco exposed a series of financial problems, which fermented and escalated at an uncontrollable crazy speed, LeEco has been deeply affected. The industry generally believes that LeEco is still suspended, but within no more than 3 months, LeEco may not be able to fill such a huge financial gap, and LeEco is likely to stage a "slump" drama after resuming trading.

Under this environment, China Post Fund, which holds a large amount of shares in LeTV, has naturally become the hardest hit area in this crisis, so it is not difficult to understand why China Post took the lead in "making trouble". In the final analysis, this is just a helpless move to avoid suffering greater losses after LeTV resumes trading.

Investment of investors who increase their capital by a fixed amount may be cut in half

In fact, as the leader of the ChiNext, LeTV's stock price once hit a historical high of 179 yuan per share, and was sought after by various institutions. As early as August 2016, China Post Fund took a fancy to LeTV, which was gaining momentum at the time.

At that time, LeTV issued a 4.8 billion yuan fixed increase at a price of 45.01 yuan per share, and China Post Fund, Caitong Fund, Harvest Fund and retail investor Zhang Jianping invested a total of 3.7 billion yuan to participate. Among them, Caitong Fund subscribed 39.1024 million shares, retail investor Zhang Jianping subscribed 24.8833 million shares, and China Post Fund and Harvest Fund subscribed 21.3286 million shares.

It is worth noting that the lock-up period for these additional shares will be lifted on August 8, 2017. Now it seems that LeTV's decline is basically certain, and after its resumption of trading, the above additional investors will probably face considerable losses.

If calculated based on the closing price of 30.68 yuan per share on the last trading day before LeTV was suspended, the institutions and individual investors who participated in the private placement have suffered a loss of 31.84%, with a floating loss of more than 1.5 billion yuan. After the private placement shares are released, the book losses caused by the valuation cut will continue to increase.

Specifically, if LeTV.com encounters three limit downs after resuming trading, and directly drops to 22.37 yuan, the floating losses of the above-mentioned investors in the private placement will expand from the current 1.5 billion yuan to more than 2.4 billion yuan, equivalent to a loss of more than half, which means that their investment will be cut in half.

As a winner of Toutiao's Qingyun Plan and Baijiahao's Bai+ Plan, the 2019 Baidu Digital Author of the Year, the Baijiahao's Most Popular Author in the Technology Field, the 2019 Sogou Technology and Culture Author, and the 2021 Baijiahao Quarterly Influential Creator, he has won many awards, including the 2013 Sohu Best Industry Media Person, the 2015 China New Media Entrepreneurship Competition Beijing Third Place, the 2015 Guangmang Experience Award, the 2015 China New Media Entrepreneurship Competition Finals Third Place, and the 2018 Baidu Dynamic Annual Powerful Celebrity.