Why did Jia Yueting tear up with Xu Jiayin again? The differences between the two sides have long been ambushed.


Why did Jia Yueting tear up with Xu Jiayin again? The differences between the two sides have long been ambushed.

Source: China Economic Weekly

Wen / Hou Jun, China Economic Weekly reporter

Who can expect that the end of this year's National Day holiday is Jia Yueting.

On October 7, Evergrande Health (HK.0708) issued a public announcement accusing Jia Yueting of depleting Evergrande by half a year for $800 million and offering Evergrande an advance payment of another $700 million. After failing to achieve its objectives, it submitted an arbitration claim to deprive Evergrande of its financing consent and terminate all cooperation agreements.

On the afternoon of Oct. 8, FF issued an official statement calling for wrongdoing, claiming that the arbitration was initiated because "Investor Hengda unilaterally breached several terms of the investment contract signed earlier with FF parent company".

The two announcement sticks to each other, and the result is two shares plummeting. After the opening of October 8th (Monday), Hengda health fell more than 35% immediately.

Sun Hongbin persuaded Rongchuang to invest $15 billion, and then failed, causing Sun Hongbin to tears at the performance meeting; and succeeded in persuading Hengda Xujia to print into the board, and finally both sides held their own words, resulting in various incidents. It has to be said that Jia Yueting's life experience is legendary.

Farmers and snakes?

Speaking of it, Jia Yueting "hand in hand" Xu Jiayin, the two together "show love" experience of the new car, but also in July. No, just three months, two people have "turned their back on their eyes".

What is the reason for this?

There are several versions. The first version is Hengda's "farmers and snakes". In their words, Hengda, who had rescued Jia Yueting from the brink of bankruptcy, was bitten back.

According to Hengda health announcement:

On May 25, 2018, the company-controlled TIME Company had paid $800 million in advance of the end of 2018. In July 2018, Jia Yueting proposed that Hengda's $800 million had been basically used up, and asked Hengda to pay another $700 million in advance. In order to maximize its support for the development of the joint venture, Hengda signed a supplementary agreement with Jia Yueting, agreeing to pay $700 million in advance if the terms of payment were met.

However, Jia Yueting used his power to manipulate the joint venture company from the majority of its directors'seats, demanded payment from Evergrande on the condition that the contract payment was not reached, and on the pretext of arbitration at the Hong Kong International Arbitration Center on October 3, 2018, demanded that Evergrande be deprived of its consent to finance as a shareholder. And terminate all agreements. According to previous agreements, Evergrande should pay $800 million by the end of 2018, $600 million in 2019 and $600 million in 2020.

At present, Evergrande has indicated that it has employed an international team of lawyers and will take all necessary actions to safeguard Evergrande's rights under relevant agreements and protect the interests of the company and its shareholders.

And this is only three months from FF's visit to Shanghai.

On June 25, 2018, Evergrande acquired 100% of Smart King Company in Hong Kong for HK $6.767 billion, thereby gaining 45% of Smart King Company, becoming the largest shareholder and officially becoming the owner of FF.

Such a high-profile move naturally aroused concern from all walks of life. In fact, everywhere is not optimistic about this "India Pavilion combination," market participants joked that "Jia Yueting's pot only real estate barons can carry.

But Evergrande "firmly believes" that both sides will "blossom", and even Evergrande has told China Economic Weekly that FF and FF are "one family" and that everyone "does the same thing", "Jia Yueting knows the car, Xu Jiayin has a lot of resources".

It must be said that Hengda's response at that time was enough to give Jia Yueting face, saying: the company's investment is not to invest in Jia Yueting himself, but the technology and team behind it, which is Hengda into the new energy vehicles, high-tech industries a key layout.

In addition, Hengda's praise of FF is not stingy: the world's leading technology and product strength, a number of technical indicators have been fully leading industry standards, has a large number of patents (in China and the United States filed nearly 1500 patents, has obtained more than 380 patents)...

The official response of FF is highly consistent with the statement of Hengda: "Xu Jiayin highly appreciates the technical strength of FF, seeing as reality, investing in FF is absolutely the right decision, Hengda will be in the capital and production base, product sales based on FF full support. Jia Yueting thanked Xu Jiayin and Hengda Group for their strong support.

Back to war?  

But there is no such thing as a free lunch.

It is noteworthy that, in addition to financial support, the cooperation between Evergrande and FF at that time had two very critical conditions:

One is the AB share mode, and Jia Yueting enjoys the power of "1 shares and 10 votes". By rough calculation, Evergrande Health holds only 12% of Smart King's voting rights through Shiying, while former FF shareholders such as Jia Yueting have 88% of their voting rights. Through this share structure of different rights, Jia Yueting still has one vote in the Smart King shareholders' meeting. That is to say, after Evergrande Healthy's shares, although Jia Yueting is only "two shareholders", he will actually control FF's business decisions.

However, this AB model is set up on the premise that the voting rights of the former shareholders of Jia Yueting FF will be reversed and the special voting rights will be returned to Hengda. In addition, stock ownership incentive does not have any voting rights.

The second condition is the time limit. Evergrande's stake was accompanied by a betting agreement with FF's former shareholders. If FF fails to deliver its first batch of electric vehicles in the first quarter of 2019, Jia will lose control of the company.

This has long foreshadowed the differences between the two sides.

Peng Jianjun, chairman of Evergrande Faraday, said on Aug. 14 at the opening ceremony of Evergrande Faraday in Guangzhou Evergrande Center that every effort should be made to ensure that FF91 meets the production target on time in the first quarter of 2009. Hengda Nansha District factory's land acquisition information is also required for construction progress.

Specifically, from the date of land transfer, the bidder needs to start construction within one month and introduce a pure electric vehicle assembly project with the international first-class level of pure electric vehicle R&D and manufacturing; it needs to be completed and put into production within 24 months; it needs to obtain the project approval of pure electric vehicle access within five quarters after the project starts. .

So, how is Jia Yueting's progress?

On August 28, the first FF91 production vehicle was offline; on September 19, it was shipped back to its Los Angeles headquarters from the Arizona testing ground.

It seems that FF has only the problem of mass production.

It is not clear that it is the most difficult stage to produce a prototype car. Li Bin, the founder of Wei Lai automobile, once said publicly, "as I said earlier, no 20 billion had better not build cars."

By contrast, the market left Jia Yueting's time is near the limit.

On the one hand, at the end of September, LTV was auctioned off as a number of core assets, Rongchuang became the largest shareholder of Le Rong Zhixin and Le Television. In China, it was still under the control of Jia, leaving only the LTV network on the edge of delisting. In foreign countries, FF has only 800 million US dollars, I'm afraid it is difficult to support the development and production of its two models in any case.

On the other hand, before this, Evergrande FF domestic team into a unified management, Jia Yueting team can not even participate in Evergrande's many decisions at home. In terms of ownership structure and capital operation, Jia Yueting is rather limited. When signing the investment agreement, Evergrande as a major shareholder enjoys the "financing consent right". If FF wants to refinance, including valuation, price and a series of detailed provisions, Evergrande has absolute control over all aspects.

Thus, in the opinion of the public, Jia Yueting's decision to break the contract was not unexpected under the increasingly precarious situation of FF control rights and interests.

New disc player

Although from the moment the betting agreement was signed, the outside world has been speculating about the game between Hengda Chairman Xu Jiayin and FF Chairman Jia Yueting, but no one expected that the contradictions between the two sides were put on the table so quickly.

In order to transform from a "real estate developer", Xu Jiayin has invested real gold and silver in the manufacturing of cars, which actually invested far more than the first batch of $800 million. It is conceivable that he will never give up control of FF easily.

At the other end of the scale, Jia Yueting came to a crossroads that might encounter "separation from each other".

Before signing a gambling agreement with Hengda, Jia Yue Ting owed a debt and broke the credit. On the list of people who paid for his car-making, from business executives to political elites to entertainment stars, there was a whole range of things.

For example, at the beginning of CCTV, Sun Hongbin, who was full of confidence, put all the 16.5 billion yuan of investment money as a one-off loss in his 2007 earnings report, describing himself as a "strong man with a broken head". There are also easy to use the car founder Zhou hang angry refers to music as misappropriation of 1 billion 300 million yuan, leading to the company's capital chain in crisis.

Not only are half of the capitalist world folded in Jia Yueting's hands, but the entertainment world has been hit by countless shots, from Zhang Yimou, Guo Jingming, Sun Honglei, to Huang Xiaoming, Li Xiaolu, Sun Li, Deng Chao and many other stars have lost a lot of money.

In June 2018, Jia Yueting and his sister were listed on the list of restricted trains and planes. As a "dishonest person", Jia Yue Ting is almost impossible to return to China in the short term. How far can CEO, a temporary FF, go?

As for the possible direction of the incident, industry insiders told China Economic Weekly that Jia Yueting was unlikely to cancel the agreement because Hengda had signed a supplementary agreement in addition to requiring the establishment of a joint venture to avoid Jia Yueting's cashing in by selling his shares. If FF's original shareholders were unable to remedy the situation, it would cede to the public. All rights of the company.

At present, for the so-called dream of car-building, Jia Yueting is losing his reputation step by step at all costs, and even desperately started the "war of dissolution". Who gave Jia Yueting the courage to be in debt? Will there be third "White Knight"? What kind of ending will Xu Jiayin win in this round of battle?

The answer to these questions is probably only given by Jia Yue ting.


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