China’s Evergrande Health is considering a suit against electric vehicle start-up Faraday Future for “misleading” the public after the latter claimed a “decisive victory” against its investor through arbitration, local media is reporting.
Instead of dissolving the weeks-long dispute between Faraday Future and Evergrande Health as expected, the emergency arbitration result released by Hong Kong International Arbitration Centre last week only adds another conflict point between the two parties as both claim to have “won” the case.
The arbitrator rejected Faraday Future’s request to deprive Evergrande Health its right to withhold its consent to FF’s future financing, but allowed the EV startup to proceed with financing under stringent conditions: the valuation of any equity financing shall not be lower than post-money valuation; Season Smart (Evergrande Health affiliate which owns 45% of the joint venture that controls FF) continues to enjoy pre-emptive rights and, pending the outcome of the final arbitration, Faraday Future can obtain financing at a capped amount of $500 million, according to a statement made by Evergrande Health on Hong Kong Stock Exchange.
Faraday Future later contradicted this in a Weibo post, accusing Evergrande of misleading the public. Withholding Evergrande’s right to consent of Faraday Future’s financing has never been the company’s goal for the arbitration. But its application to seek $500 million in financing is supported by the arbitrator, the firm claimed.
In response to Faraday Future’s announcement, Evergrande subsequently counterattacked that Faraday Future will be legally responsible for their announcements as a listed company. “In view of the fact that Faraday Future founder Jia Yueting has confused and misled the public in the statement, Evergrande is currently working with a team of lawyers and considering suing Faraday Future and Jia Yueting,” according to the company.
The electric vehicle startup announced earlier this week that it plans to cut salaries by 20% for all staff as well as a round of layoffs to reduce its operational cost.