The war between EV startup Faraday Future (FF) and its main investor Evergrande appears to be over after the two companies reached a restructuring agreement on Dec. 31. The agreement marked a period on FF’s rocky year and may potentially get the company back on its feet.
The conglomerate will walk away with full control over FF’s efforts in China, and both sides will drop all ongoing litigations against each other, according to a release posted to the Hong Kong Stock Exchange.
“It is good news for Faraday, as it now has new opportunities to raise fresh funds after the settlement of its dispute,” said Yin Ran, a Shanghai-based investor involved in bond and private equity investments.
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According to Evergrande, the restructuring agreement enables the company to focus on its business development and obtain financing. The directors consider the terms and conditions of the agreement fair and reasonable, and are in the interests of Evergrande and its shareholders as a whole.
Evergrande also agreed to give up control over FF’s assets, which were secured as collateral of the investment. Evergrande’s 45 percent stake in the overall structure of FF will be decreased to 32 percent.
FF will have the option to buy out Evergrande’s stake in five years. All the original agreements between the two parties have been terminated.
The quarrel between the two parties lasted months in 2018. Evergrande saw the advance payment of $700 million as a manipulation by FF, while the latter saw the delay in payment by Evergrande as an intentional strategy to gain control of its intellectual properties.
After the tumultuous months, the EV startup has promised to restore their employees’ salaries to what they used to be. However, only about 250 employees remain from the 1,000 working for FF earlier this year.
The company now has to find a way to rebuild its workforce in order to get the FF91 into production in 2019.
Featured photo credit to Yicai Global