On November 12, local time in the United States, Jia Yueting, the founder of LeEco, publicly stated that he had misunderstood the real purpose of Evergrande's investment in FF.Jia Yueting said that Evergrande is seeking global control of FF.During the contact process between the two parties, Evergrande has repeatedly proposed that FF should be incorporated as an asset into the Hong Kong-listed company Evergrande Health (00708.HK), while he hopes to operate FF to be listed independently.
FF officially released a speech made by Jia Yueting at the company meeting that day.Jia Yueting is the CEO of Faraday Future (hereinafter referred to as FF), an American start-up electric vehicle company. This company is Jia Yueting's hope for a comeback in the future.After LeTV's financial crisis broke out in November 2016, the founder Jia Yueting was heavily in debt, and many lawsuits sent him to the list of dishonest persons subject to execution.In the middle of 2017, Jia Yueting left the United States and has been stranded abroad until now.
Focusing on the struggle for FF's actual control, the two parties resorted to legal means.On November 12, Evergrande Health issued an announcement stating that Smart King, a joint venture company actually controlled by Jia Yueting, filed another emergency arbitration application with the Hong Kong Arbitration Center, requesting to deprive Evergrande Health of Shiying, a subsidiary of Evergrande Health, of its asset mortgage.Due to the limitation of this right, FF cannot obtain financing through asset-backed loans in the short term.
Smart King is a newly established corporate entity after Evergrande became a shareholder, absorbing FF assets into it, and Evergrande's subsidiary Shi Ying indirectly holds shares in FF by holding shares in Smart King.
According to FF, the result of the second emergency arbitration is expected to come out within a month.If the arbitration wins, it will open a channel for FF to solve the short-term funding problem.
FF is approaching potential investors.A person engaged in research and development at FF in the United States told a Caixin reporter that FF’s financial situation is worrying. On November 15, it will pay half a month’s salary to employees, totaling 1.63 million US dollars, but the money has not yet been settled.
Caixin reporter learned that about two weeks ago, FF's factory in Hanford, California, USA was closed, and the factory construction and production lines were suspended.
The foundation of cooperation has collapsed
On November 12, Matthias Adyt, the new head of R&D of FF, also spoke at the FF full-staff meeting.According to the content of the meeting disclosed by FF, the person in charge believes that Evergrande’s monthly assessment, camera monitoring and other measures treat R&D technicians as real estate sales, which will seriously stifle the creativity of high-tech companies.Evergrande is a real estate developer, and its corporate culture is not compatible with FF.
He said that once FF is controlled by Evergrande, Evergrande will take FF’s intellectual property as its own, and FF in the United States will be reduced to a backup R&D center, and FF will be incorporated into Evergrande Health’s listed company.This is where FF executives are wary of Evergrande.
Jia Yueting believes that during the cooperation period of more than a year, Evergrande took advantage of the special status of the major shareholder and stuck FF's neck. The real purpose of Evergrande's investment in FF is to obtain control of FF.He revealed that when he contacted Evergrande in October last year, the super voting rights of the founders of technology companies, that is, the model of AB shares, was the basis for the negotiations between the two parties.Never giving up control of the company is a prerequisite for FF to accept investment.
A person close to Evergrande disagreed with the above view.He told the Caixin reporter that it was Jia Yueting who shook the foundation of the cooperation between the two parties.
Evergrande hoped to expand into the Chinese market after becoming a shareholder, and the former LeEco employees began working in the name of FF China.In August this year, Evergrande Faraday Future Intelligent Vehicle (China) Group Co., Ltd. was established.This is exactly the FF China legal entity.In the original plan, FF's first model, FF91, was produced in the United States, and the second model, FF81, was produced in China.
He hindered FF from setting up a R&D supply chain system in China, as well as data sharing between FF America and FF China. According to the source, Jia Yueting is nepotistic in management, requiring all investment funds to be invested in the United States, and China’s investment pressure and burdens are transferred to investors..
