EV Startup Faraday Future Seeks to Oust Investor Who Defaulted on Payment
The arbitration process to rid of the investor and look for new funding was initiated last week.
Faraday Future CEO Jia Yueting reportedly opened arbitration proceedings last week with the Hong Kong International Arbitration Centre to free itself from the influence of an investor that missed a crucial payment.
China Evergrande Group subsidiary Evergrande Health Industry Group Limited announced in June that it intended to buy a 45 percent stake of the electric vehicle startup. According to its own statements, Evergrande would accomplish this with an $860.2 million buyout of 45 percent stakeholder in FF, Season Smart Limited, and commit to paying Faraday an additional $1.2 billion by the end of 2020.
Evergrande reportedly announced Sunday that it agreed in July to pay up $700 million of the $1.2 billion early if Faraday achieved certain conditions, according to Reuters. It accused Faraday CEO Jia of triggering arbitration last Wednesday, claiming an attempt to prevent Evergrande from influencing future fundraising.
Faraday released a statement Monday in response to Evergrande's accusations that confirmed action is being taken to divorce Faraday from Evergrande's influence. The company claims it is preventing it from seeking financial support from other parties, and accused Evergrande of attempting to wrest control of the company and its intellectual property. However, Faraday's statement also conflicts with reports that Evergrande owed the automaker $700 million in 2018, claiming itself to be owed $500 million instead.
If arbitration goes through in favor of Faraday, Evergrande will not be permitted to buy out Season Smart's share in the company, and Faraday will be able to shop around for other investors.
Faraday CEO Jia is wanted in his home country of China for unpaid debts, and the financial situation of Faraday has long been suspect, despite having a manufacturing facility in Nevada that reportedly started pre-production of its delayed FF91 electric crossover in August.
The Drive contacted Faraday for comment, and we will update when we receive their response.