In a move to protect the interests of its shareholders, Compal Electronics has announced a plan to invest CNY700 million (US$101.65 million) to take a 2.15% stake in Leshi Zhixin Electronic Technology, a TV manufacturing subsidiary of China-based TV/vidoe network LeEco.

Compal appears to have turned part of the debts which LeEco owed the company into equity investment, according to industry sources.

As of September 30, 2016, LeEco owed Compal NT$8.29 billion (US$274.52 million) in account receivables. Compal is a smartphone subcontractor for LeEco. Compal booked NT$360 million and NT$695 million as bad debts in the third and fourth quarters of 2016, according to the company's filing with the Taiwan Stock Exchange (TSE).

However, LeEco has been paying its debts regularly since November 2016 and has returned nearly 50% of the total debts to Compal, Compal president Ray Chen said at the company's latest investors conference.

Chen also stated that the investment in LeEco will help expand the cooperation of the two companies from smartphones to include IoT, virtual reality (VR) and other devices. Compal is also evaluating the possibility of producing TVs for LeEco.

Compal also does not expect to book any more bad debts from LeEco in the first quarter of 2017 as the China-based TV network is paying the debts regularly, Chen added.

The transaction is expected to be completed before June 21.