ofo fighting ‘immense’ cash flow issues
SHANGHAI/HONG KONG Chinese bike-sharing start-up ofo, backed by Alibaba Group, is battling "immense" cash flow problems and disbanding the company has been considered as an option, its chief executive said in a letter to employees.
The company has been hit by a costly battle with main rival Mobike, owned by Meituan Dianping, that has eroded its ability to make payments to suppliers.
In the past week, millions of users, uncertain about ofo's future, have also applied for a return of the deposits they had paid to use the platform, adding to the company's financial woes.
"The whole of this year we have borne immense cash flow pressures. Returning deposits to users, paying debts to suppliers and keeping operations running," Mr Dai Wei said in the letter posted on social media by ofo's head of public relations.
"It has meant turning every renminbi into three," the chief executive said.
Mr Dai added that he had thought "countless times" about ways to resolve the issues, "even of dissolving the company and applying for bankruptcy".
ofo and Alibaba were not available for comment yesterday.
Mr Dai, also ofo's founder, added that he was determined to keep the company afloat.
"As pressures mount we must endure, as difficulties grow we must find ways to overcome them," he said in the letter dated Dec 19.
In August, Reuters reported that Didi and Alibaba's Ant Financial were in talks with ofo for a joint buyout, potentially valuing the startup at up to US$2 billion (S$2.7 billion). - REUTERS