FF contention of control: the "friends circle" turned the agreement in the gray area?


FF contention of control: the

Reporter Zhang Xiaoling Sun Yimeng reports from Shenzhen and Guangzhou

FF said that despite the temporary cash flow difficulties of FF, the core teams of production, R&D, supply chain and other departments are still promoting the production and testing of FF91, and will spare no effort to complete the production delivery of FF91 and the development of future models. But people in the industry believe that anyone who has invested in FF will be worried about subsequent disputes as a result of equity disputes.

The honeymoon lasted only three months. Jia Yueting and Xu Jiayin fell into a "break" and their mutual struggle became the annual drama of the capital market.

From a single shareholder holding 45% to an arbitration rival, the feelings between Evergrande and Faraday Future (FF) quickly warmed up and cooled down. FF accused Evergrande of not fulfilling the contract, paying the funds, depriving Evergrande of control over financing and tearing up all the contracts. Evergrande sword pointed to FF to expel the appointed financial personnel and try to unilaterally kick Evergrande out. Bureau.

FF in the whirlpool is not easy. Jia Yueting is constantly trying to find new investors when executives leave their jobs, employees initiate labor arbitration, the capital chain is tense and even on the verge of bankruptcy.

Evergrande does not want to give up the assets of FF91 and new energy vehicles. On the other hand, the transaction of Hengda's stake in Guanghui Group has been completed and the channel has been paved. How can there be no car?

What is the financing prospect of Hongkong International Arbitration Center for FF5 billion dollars? Can FF completely shake off Hengda? What will Hengda's counterclaim be? For some observers, the battle seems unlikely to have a real winner.

Dispute over control

FF, under the control of Hengda and Jia Yue Ting, seems to have fallen into Luo Sheng men. In fact, from the very beginning, both sides wanted to have the actual control of FF.

Before Hengda entered the stock market, the actual control of FF was in Jia Yueting's hands; after Hengda's entry, finance, capital and personnel were rearranged for a time, and Jia Yueting was restricted.

After the last wave of arbitration disputes, the latest competition between the two sides revolves around the key financial review rights and the right to use funds.

On November 7, Hengda Health announced that Shi Ying, a subsidiary of Hengda Health, had filed a full counterclaim against Jia Yueting and Smart King, a joint venture company.

According to the announcement, when Jia Yueting and the joint venture company forcibly evicted the cashier appointed by Shiying and forcibly prevented Shiying from entering for financial review, Shiying was unable to know the financial situation of the joint venture company.

According to the shareholders'agreement, Evergrande has the right to conduct financial review and appoint cashiers. It is agreed that if the cashiers do not sign for seven days, they will be deemed to agree to pay. This means that after the departure of the teller dispatched by Hengda, Jia Yueting regain his financial power.

FF quickly responded that the company fulfilled its obligations under the relevant agreements at the first time, and there was no FF default.

FF blamed all the blame on Hengda. The response shows that after August, FF fully supports Hengda's personnel to enter for financial review, including providing detailed and complete financial information, records and so on. Hengda's refusal to implement the agreement has in fact rendered the Agreement invalid and automatically terminated.

In fact, after FF arbitrated Hengda Health in early October, FF officially stopped the cashier and relevant financial examiners'access to FF financial information and related work, but in FF's view, this was caused by Hengda's unilateral breach of contract and failure to pay the financing on time.

The two sides refused to compromise.

In fact, Hengda became a shareholder from the very beginning. In the previously exposed betting agreement, if FF fails to fulfill its first batch of production commitments in the first quarter of 2019, it will be considered that the original shareholders of FF can not fulfill their duties, and their special voting rights will be turned back to Evergrande.

From this arrangement, we can see that Hengda is eager to gain the intention of FF control. FF statement also pointed out that Evergrande tried to gain control and ownership of all FF China and FF IP.

Jia Yueting certainly did not want to lose control. The FF statement said that the only reason why the arbitration "rescinds all agreements" was that Evergrande failed to achieve its intention (to control FF comprehensively) and then refused to pay the funds it had agreed to pay.

Lose both sides?

The arbitration process is advancing, and the confrontation between the two sides will continue.

"It's very difficult for FF to get $500 million in financing," said Huang Lichong, co-founder of Co-ordinated Strategic Management Group. Hengda's investment in FF belongs to the help of "circle of friends", and now it has turned against each other.

FF is not easy to leave Hengda. Hengda Health previously announced that as of May 30, 2018, Smart King and its subsidiary FF had an unaudited book value of about $110 million, a loss of $570 million in 2016 and a loss of $339 million in 2017.

People close to Hengda say that FF is in a tight financial position and is on the verge of bankruptcy. On October 31, in order to solve the financial crisis, FF began to lay off employees, while lowering the hourly salary of informal employees by 20% and the annual salary of full-time employees by 20%. Jia Yueting received only one dollar per year.

Internal mail showed that FF management also decided to close its headquarters in Gardiner, California, and part of its Hanford plant business. Jia Yueting said in an e-mail that employees would be given unpaid leave or "unpaid leave" before receiving new funds.

To add insult to injury, Nick Sampson, senior vice president of FF R & D, announced its departure in October 31st. As one of the founders of FF, he has worked in FF for 4.5 years and is responsible for all technology and engineering development. Prior to this, dozens of FF employees also initiated labor arbitration in Beijing.

On November 8, FF announced that it was facing temporary cash flow difficulties due to Hengda's health default, which forced it to take immediate interim measures to deal with it. FF Selection left about 500 core team members, mainly for the completion of FF91 production and delivery of engineering research and development, manufacturing and supply chain team.

In the next period of time, capital has become a sharp sword hanging on Jia Yueting and FF. Therefore, Jia Yueting is eager to find new investors. A week ago, he was exposed to contact with Stifel, a top investment bank.

According to Huang Lichong, Stifel Financial is a medium-sized investment bank in the United States. It has previously focused on the United States and has rich experience in high-tech investment banking.

FF said in its response on the 8th that its financial management system, process specifications, capital planning, financial reporting professionalism and integrity have been fully recognized by Stifel. At the same time, after assessing the value of FF's tangible and intangible assets, FF actively seeks to cooperate with FF and promote external financing.

FF said that despite the temporary cash flow difficulties of FF, the core teams of production, R&D, supply chain and other departments are still promoting the production and testing of FF91, and will spare no effort to complete the production delivery of FF91 and the development of future models.

But the situation of FF is still very unfavorable. Huang Lichong believes that because of the equity dispute, anyone investing in FF will worry about the subsequent disputes.

In the light of time, similar international arbitration procedures usually lasts 6 months to 1 years. Huang Lichong said that the longer the dispute lasted, the more adverse it was for FF.

Huang Lichong believes that disputes can only be decided by an arbitral tribunal, usually depending on how the agreement is signed. Neither side has disclosed the specific agreement. "Because they are friends who trust each other, many arrangements are not carefully agreed in advance, there are some grey areas," Huang Lichong pointed out.

"If the arbitration fails, Hengda may have to pay more money." Huang Lichong thinks Hengda's situation is equally worrying. He points out that the shareholding dispute is arbitration, but the loss caused by the result of the shareholding dispute is still uncertain whether it can be litigated or arbitrated.

Therefore, after the arbitration result, the possibility of litigation by other shareholders of FF or FF is not excluded. Hengda's health may also be dragged in for a long time.


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