According to Beijing Business Today, Lentuo International’s (LAS) business operations are in trouble.  In light of this, the GeoTeam may initiate a short position. It is reported that all of LAS’ 4S stores are…[hide] partially shutdown. A person close to LAS told reporters from Beijing Business Today that “due to the capital turnover problem, new cars sales at LAS’ 4S stores have all stopped, and only the after-sale [services] are still in operation. Now, the Group is actively seeking solutions [for the current problems], and related government agencies have stepped in.” (Quote Source: Beijing Business Today )

Reporters Visit LAS’ 4S stores in Beijing

The reporters from Beijing Business Today visited all of LAS’ 4S stores in Beijing.  In one Mazda 4S store located in Shijingshan and Yizhuang, the reporter saw that there were several locked show cars in the store. Sales representatives said that the keys of those cars have been taken by banks due to problems with the Group’s operations. “In middle of March, the capital problem should be solved,” said the sales representatives.

One person close to LAS told reporters that the company has launched multiple after-sale promotion policies to collect capital as soon as possible. In addition, LAS is borrowing money from employees at an annual interest rate of 30%.

We wrote our first bearish article on May 28th, 2014, “Lentuo International Related Party’s Undisclosed RMB 250 Million Debt Issuance Raises Red Flag”, and our follow-up article on June 5th, 2014 “Obvious Holes Remain In Lentuo International’s Explanation Of Disclosure And Filing Obligations.”[/hide]

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