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Briefing: Faraday Future settles months-long dispute with investor Evergrande
Faraday Future gets a lifeline as it settles months-long battle with Chinese investor – The Verge
What happened: Electric vehicle startup Faraday Future (FF) has reached a deal to end a months-long dispute with its main investor, Evergrande Health. Evergrande announced on Monday that it has agreed to restructure its $2 billion investment in FF and that both parties have agreed to drop all litigation against each other. Under the new agreement, Evergrande will control a 32% stake in FF, down from the previous 45%. The company will also take control of FF’s efforts in China.
Why it’s important: At the end of 2017, Evergrande agreed to bail out FF, which was said to be nearing the brink of bankruptcy, and promised to invest $2 billion in the company. Evergrande made a payment of $800 million to FF in early 2018. However, FF had used up the cash by July and asked for a $700 million advance on the remaining the $1.2 billion. Evergrande initially agreed, but later backed out of the agreement claiming that FF’s founder Jia Yueting, who has been placed on a blacklist in China for defaulting on debt, failed to distance himself from the company, as the companies had previously agreed. In October, FF took the matter to an arbitrator in Hong Kong and accused Evergrande of breaching funding obligations.