CORRECTED-Auto firm Faraday Future wants to scrap stake sale to Evergrande Health – filing–Reuters
What happened: According to a statement from Chinese firm Evergrande Health yesterday, American electric vehicle startup Faraday Future wants to call off a major sale of its stake. In June, Evergrande Health allegedly agreed to buy Season Smart Ltd., which owned 45% of Faraday, for a total of $860.2 million. In addition, the healthcare company agreed to pay the car startup another $1.2 billion over the next two years. On Sunday, however, Evergrande claimed that despite agreeing to pay $700 million in advance of their agreement, Faraday founder Jia Yueting had begun an arbitration process against Evergrande for failing to fulfill their side of the deal. Jia’s intention is to cut off the agreement, taking away Evergrande’s say in future financing plans, according to the statement. Faraday Future has not yet released an official response.
Why it’s important: In August, Faraday Future announced it had begun assembling its flagship model, the FF91, in the US (the company’s operating headquarters, meanwhile, are in China). But although things may be looking up for the startup, walking away from such a large deal with Evergrande may result in the company once again facing money problems. It certainly wouldn’t be a new situation for Faraday co-founder and majority stakeholder Jia Yueting, who previously headed troubled tech conglomerate LeEco.