Jan. 24 (NBD) -- Leshi Internet Information & Technology Corp Beijing (hereafter referred to as "Leshi"), the Shenzhen-listed subsidiary of debt-ridden tech giant LeEco, will see its shares resume trading today after nine months of waiting. 

The market, however, shows a pessimistic attitude towards Leshi's stock trading resumption. 

At an investor briefing on Tuesday, Leshi said that the company has no way to predict its share price. If Leshi's stock price continues to fall, Jia Yueting will have to find ways to superadd pledge to its creditors in accordance with the terms of the agreement. If he fails to do so, the creditors will have the right to dispose the pledged stock right. At present, Jia Yueting is still the company's largest shareholder.

In a statement released on Tuesday evening, the company reminded that its business results for last year will likely see a sharp decline.

One private equity manager who asked to remain anonymous told NBD that Leshi's shares may not turn out to be as pessimistic as anticipated.

Li Bao, executive director of Qianyuan Capital, said to NBD that the negative impacts of Leshi has been almost digested by the market, but it still takes time to say whether it can make a turnaround with the help of Sunac China. 

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According to Leshi's report for the third quarter of last year, company founder Jia Yueting holds 1,024,266,644 shares of Leshi, and up to 99.5385 percent of his stake has been pledged to date. 

Data shows that Jia Yueting and his person acting in concert Jia Yuemin as well as Leshi Holding (Beijing) Co., Ltd. had a 28.47 stake of Leshi in total, which has been all frozen as of the end of the third quarter of last year. 

This means that if Leshi's stock price keeps falling and going close to the close-out level of Jia Yueting's pledged shares after resuming trading, there will be no possibility for Jia Yueting to pledge more Leshi shares. 

In that case, Jia Yueting would either increase the leverage available for pledge to avoid forced liquidation, or watch the pledged shares blow up. 

Not only so, Tianjin Jiarui Huixin Corporate Management Company (hereafter referred to as "Jiarui Huixin"), the second largest shareholder of Leshi, also had its 8.56 percent stake of Leshi all been pledged.

If Leshi's stock price continues to dive after resumption, both shareholders' pledged shares will be at risk of being liquidated.  

But compared with Jia Yueting in piled debt, Jiarui Huixin faces less risks given its stronger financial strength. 

According to information from Wind Information Technology Co., Ltd., a leading integrated service provider of financial data, information, and software, Jia Yueting had pledged Leshi shares for up to 38 times between April 5, 2012 and October 26, 2015. This means he has cashed out most of his stakes of Leshi though he and his brother once increased their holdings. 

In case that Jia Yueting's pledged shares blows up, Jiarui Huixin controlled by property developer Sunac China will become the largest shareholder of Leshi, and Sunac China's Chairman Sun Hongbin will be the actual controller of the debt-stricken company. 

At the investor briefing yesterday, Sun Hongbin, who currently serves as Leshi's Chairman, confessed that he was aware of Leshi's affiliated transactions through the due diligence before his stake purchase in Leshi, but the affiliated parties in debt to Leshi were not able to make repayment, and he didn't see that coming.  

He spoke bluntly that sometimes, people should dare to take risks, but sometimes, they should also concede defeat. Did he simply draw a conclusion about the past decisions? Did he suggest that Sunac China wouldn't have any interest in raising its stake in Leshi? Different people will have a different interpretation of his words.  

Email: lansuying@nbd.com.cn