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Evergrande Health, the investor who saved two billion dollars this summer electric vehicle start-up Faraday Future, besieged, now accuses it of attempting to break an agreement with the previous sponsor, Season Smart . In June, Evergrande Health announced that it would resume the financial commitment taken by Season Smart last November, which had allowed Faraday Future to no longer have any money. Now, Evergrande Health says Faraday Future Jia Yueting has started an arbitration in Hong Kong in order to reverse its agreement with Season Smart.
Evergrande Health agreed in June to purchase $ 860 million from Season Smart's stake in Faraday Future for $ 860 million, up from $ 800 million originally paid, then finalize the transaction with additional payments of $ 600 million in 2019 and 2020.
However, in a new document filed with the Hong Kong Stock Exchange, published by Reuters, Evergrande Health said it was informed in July by Faraday Future that the $ 800 million received from Season Smart had already been spent and that Smart King, the joint venture between Faraday Future and Season Smart, had been asked to provide an additional $ 700 million. As a result, Season Smart entered into an additional agreement providing for an advance of $ 700 million.
Evergrande Health now accuses Faraday Future of "manipulating Smart King" by using its majority seats on the Smart King board to begin arbitration in Hong Kong, claiming that Season Smart had not fulfilled its payment terms. Evergrande Health states that Faraday Future uses this as a pretext to deprive Season Smart of its shareholder rights to approve Faraday Future's future financing plans and to terminate its agreements with Season Smart.
As a result, Season Smart has "engaged a team of international lawyers and will take all necessary steps" to protect its rights, as well as the interests of Evergrande Health.
Despite agreements with Season Smart and Evergrande Health, The Verge reports that Faraday Future's financial difficulties continued, with some vendors and suppliers of the company claiming they had not been paid for weeks and Faraday was also considering layoffs. The Verge sources indicate that at least three companies have filed liens with the California Secretary of State on payments owed by Faraday Future.
In the meantime, society faces a host of other legal and financial problems. These include a legal battle with his former chief financial officer, Stefan Krause, that Faraday Future claims to have stolen intellectual property (Krause accused Faraday Future of defamation). Jia is also under fire from debts contracted by LeEco, the technology conglomerate he founded. The Chinese government froze its assets in 2017 and, in an unusual gesture, publicly ordered it to repay LeEco investors.
TechCrunch has contacted Faraday Future for comments.
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