Faraday Future Pushes for Arbitration to Break Deal with Evergrande
Faraday Future (FF) is pushing for an arbitration against Evergrande, a Chinese real estate conglomerate, in an effort to back out of a major investor deal with Evergrande Health, Evergrande’s healthcare division, according to a new filing by Evergrande Health Industry Group with the Hong Kong Stock Exchange on Oct. 7.
SEE ALSO: Faraday Future Establishes HQ in China after Evergrande Became a Major Investor
FF chief Jia Yueting accused Evergrande, one of its major investors, of not fulfilling its end of the bargain, which includes both buying the company with the 45 percent stake (Season Smart) for $860.2 million and paying two $600 million installments in 2019 and 2020.
FF has never stopped pursuing our dreams despite adversity. We are committed to our mission, and will always fight to protect our company, partners, reservation holders, employees, and equity holders. pic.twitter.com/WulMn200oE
— Faraday Future (@FaradayFuture) October 8, 2018
However, Evergrande sees things differently. Evergrande said the $860 million they paid had already been used up by FF and accused Jia of “manipulating” the board of directors to pay another $700 million to FF in advance this July. According to the filing, Evergrande also accused Jia of trying to deprive the company of its consent rights to approve future financing deals.
Evergrande said it will take “all necessary actions” to protect the company’s interests and shareholders.
The investment deal between FF and Evergrande was sealed on Nov. 3, 2017 and was approved by the U.S. government in June, at a time of high tension between China and the U.S. Evergrande Health has agreed to buy a 45 percent stake in the automotive company for a total of $2 billion and is now the largest shareholder of FF.
SEE ALSO: Faraday Future’s New Chairman Confirmed After Evergrande Group Chair’s First Visit to Los Angeles
This deal is believed to save FF from going bankrupt at the end of 2017. FF was reported to have trouble paying its suppliers in 2017 and was sued to court by some. The electric car maker burned as much as $900 million in 2016 and 2017, and owed at least $100 million at the start of 2018, according to The Verge.
Jia has a history of financial problems, as he is best known as the exiled founder of the troubled LeEco and is now placed on the national debtor blacklist. There are rumors that the arbitration Jia is pushing for aimed at retaining his control over the company and introducing a new investor. The name and other details of the new investor remain unidentified.