Rival gambling agreement between Evergrande and Jia Yue Ting


Rival gambling agreement between Evergrande and Jia Yue Ting

Author Qian Tongxin

On the evening of October 7th, Hengda's health bulletin made Jia Yueting once again become a "lost heart Han". Evergrande Health accused Jia Yueting of unilaterally demanding that the agreement be torn up and spent $800 million in half a year to arbitrate the HKSE in the absence of a new $700 million infusion from Evergrande.

In this regard, Faraday Future (hereinafter referred to as "FF") 8 afternoon issued a statement that the only reason it tried to get rid of Evergrande is that Evergrande failed to fulfill its commitments and pay the money agreed in advance. Evergrande should not detain money while preventing FF from accepting other investments.

In fact, under the betting agreement between the two parties, if FF fails to meet its production target by the end of 2018, or if Evergrande considers Jia Yueting incapable of fulfilling his duties, then Jia Yueting's voting rights will be transferred to Evergrande, thereby losing control of the company.

Half a year spent 800 million dollars.

At present, the focus of the contradiction is that Evergrande and FF have different opinions on the term "payment terms are met" in the supplementary agreement. Evergrande said that FF did not fulfill the terms of payment promised before, and therefore withheld its funds; FF said that the company and Jia Yueting have fulfilled all the terms of payment required in the tripartite agreement proposed by investors in July this year.

The two sides did not give any details about the terms and conditions involved in the supplementary agreement.

Another focus of controversy is whether Mr Jia uses his right to a majority of SmartKing's board seats to manipulate the company. Evergrande believes that Jia Yueting has fulfilled the obligations under the relevant agreements, using the majority of directors to arbitrate Shiying, seriously harming the rights and interests of Shiying and its shareholders. The FF side refutes the claim of manipulating SmartKing. "Neither Jia Yueting nor anyone has manipulated the board of directors to reach these agreements." "Evergrande has been very clear from the start where the amount to be paid is and when it will be paid, which is related to FF91's production plan for next year," FF argues.

It is unclear whether Evergrande and FF have reached a prior agreement on this financial expenditure after spending $800 million in half a year. But according to Stefan Krause, the former CFO before FF, spending $800 million in half a year is crazy. During his tenure, Klaus had objected to Jia Yueting's poor financial control and eventually left FF because of the conflict with Jia Yueting. Previously, Claus had good financial management records.

According to FF's statement, Evergrande withheld the amount payable and did not allow FF to find other sources of financing. Hence, it proposed arbitration to deprive FF of its right of consent to finance.

Hengda, Xu Jiayin in the initial investment FF also did not expect the economic situation mutation, real estate business life is not easy. A senior financier told the first financial reporter: "Hengda is very difficult to come up with cash at present, because the situation in the second half of the real estate business is worrying, Hengda can no longer take money to Jia Yueting. And if it can contend for control of FF, Hengda can rely on state support for electric vehicles to tide over the current difficulties, at least in terms of debt to win some bargaining power. Jia Yueting, for his part, can temporarily delay the situation by arbitration, still control FF, and swap time for space.

Mass production of red light

The problem now is that FF is in the critical mass production phase of FF91, after spending almost half a year building its Hanford, California plant. On August 28 this year, FF announced that the first FF91 production vehicle was offline, and on September 19, the production vehicle was shipped back to Los Angeles headquarters from the Arizona testing ground.

But the company did not report that the FF91 mass-produced car caught fire in September at FF's annual Future Day for employees and their families because of battery failures. People familiar with the matter told First Financial Reporter that FF employees and their families had witnessed the incident, but the company signed a confidentiality agreement with employees, not allowing employees to disclose the accident. In this regard, FF did not respond positively to the first financial reporter.

But inside FF, the fire incident has become a major obstacle to mass production. Not only that, the first financial reporter from the supplier side to understand that FF is in arrears with suppliers. In August this year, a supplier of FF told First Financial Reporter that FF intends to order more than a dozen high-value parts from its company, and plans to order thousands of such parts next year. However, just after the conflict between Evergrande and FF, the supplier told First Financial Reporter: "FF has recently delayed payment and is said to have to wait four or five weeks before payment can be made." Based on the pricing of the company's products, First Financial Reporter estimates that the order ranges from tens of thousands of dollars to 100,000 dollars.

An analyst at a consulting firm told First Financial Reporter that his American colleagues had visited FF's factory earlier, but the company refused to let them visit it. "Everyone has gone, but they refuse to let them in, so they go outside for a round trip, and they will directly pull into the conference room for discussion." In his view, FF does not release the actual production signal, which is worrying, but also causes a variety of negative outside speculation. "Getting financing can stir up a lot of wind, prototype money is easy to make, but mass production is always the biggest problem." He told the first financial reporter.

Dreams are full, but reality is very skinny.

Jia Yueting, who was blocked from taking money from Hengda, began to look for money elsewhere, which was why he was anxious to get rid of Hengda. "Evergrande is trying to win control of FF China and all intellectual property rights of FF by refusing to pay, and to prevent FF from obtaining financing through other means," FF said in a statement.

When Shi Ying injected money into FF in June this year, according to a previous source obtained by First Financial Reporter, although Jia Yueting, the founder and CEO, still had control of the company, enjoyed the right to vote "one share, ten votes", under the betting agreement, if the FF could not meet its production target by the end of 2018, or if it was permanent. It is widely believed that Jia Yueting is unable to perform his duties, so his voting rights will be transferred to Hengda, thus losing control of the company.

From this agreement, we can see that the root of the intensification of the contradiction between Hengda and Jia Yueting is the control over FF. According to public information, the board of directors of SmartKing Company currently has seven directors. The former shareholder of Jia Yueting's actual control holds five board seats, and Hengda holds two seats. Hengda does not participate in the daily management of SmartKing.

In view of Jia Yueting's desire to introduce new capital, the reasons for Hengda's refusal are also obvious. On the one hand, it will dilute the original equity and damage the rights of the original shareholders; on the other hand, the introduction of new capital pricing is also a big challenge.

On July 13 this year, Xu Jiayin and his party inspected FF and said "seeing is believing". "Investing in FF is absolutely the right decision, and Evergrande will give FF full support in terms of capital, production base construction and product sales," he said.

Sun Hongbin was ruthlessly abandoned by Le TV. He was also touched by Jia Yueting's passion. But after tens of billions of dollars of money drifted away, Sun Hongbin finally realized that Le TV was a bottomless pit, and the reality was far more cruel than his dream.

But FF still says that it will never stop pursuing the pace of dreams, even in adversity. "We will act on our mission and always fight to protect the interests of our company, partners, subscriber owners, employees and investors." FF wrote in the statement.

Will Xu Jiayin's money end up like Sun Hongbin? In this regard, a senior industry insider familiar with Jia Yueting told the first financial reporter: "Unless Jia Yueting buys a 45% stake in Hengda, or finds the next person to take over. If FF goes bankrupt, then the money will of course be wasted.


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