Author丨Bai Yang, Du Qiaomei
Edit丨Zhang Weixian, Zhang Mingyan, Liu Xueying
September 26, Faraday Future (FF) announced that it had reached a binding governance agreement with the company's major shareholder FF Top, which solved a series of issues related to corporate governance.
It is reported that the content of the agreement includes FF Top's agreement to immediately withdraw the lawsuit against FF's board of directors, adjusting the size of FF's board of directors and the board of directors, and relevant revisions to the shareholder agreement between FF and FF Top.
This means that FF has been in the process of "infighting" for some time, but this has not changed its current situation of capital shortage.
As of September 26, the closing of US stock , FF's stock price rose 9.57%, and it was still only US$0.84 per share, which has fallen by 94% from the first day of listing.
Picture / Wind
In addition, in terms of cash status, FF had US$505 million at the end of last year, while as of August 9 this year, there were only US$52.2 million in the account. There are only a few days left before the end of the third quarter. and FF's previously promised mass production in the third quarter seem to be postponed again.
Major shareholders proposed to remove director
A month ago (August 18), as the major shareholder of FF, FF Top and its affiliates announced that they had submitted a preliminary power of attorney statement regarding the special shareholders' meeting convened by the company, and clearly stated that they hoped to remove FF director and former chairman Brian Krolicki.
Participants in submitting the Power of Attorney Statement include FF Top, FF Global and Pacific Technology (collectively, the "FFGP Entity"), of which FF Global is jointly owned by its 19 members, including current and former employees and executives of the company, and managed by a board of directors composed of six managers.
At the same time, FF Global is a management member of Pacific Technology, and Pacific Technology is the administrator and indirect only owner of FF Top.
As of August this year, FFGP entities have beneficially held a total of 1177,05569 shares of FF common shares, accounting for approximately 35.9% of FF's equity.
litigation documents state that the current board of directors has forced the company into a desperate situation. Investors claim that the “severely divided” board has “forced the company into a desperate situation” and “pushed the company into unnecessary bankruptcy.”
FF Top stated in the power of attorney that FF's operating performance has not been able to meet the goals set by the company in the public documents over the past year, and this situation has not improved. This poor performance was largely due to the dereliction of duty by Krolicki and the board members who acted in concert with him - Sue Swenson, Scott Vogel and Jordan Vogel.
In the view of the FF Top entity, Krolicki promoted, supported or facilitated board decisions that demonstrated poor leadership, disregard for shareholders’ best interests, failed corporate governance and lack of financial prudence.
In addition, FF Top believes that its request to remove Krolicki is based on the rights granted by the Shareholders Agreement signed with FF in July 2021.
Under the allegations in the lawsuit, the fact that FF raised funds for the production of FF91 will also be affected, and even the alarm bell for FF delisting will be sounded again. On September 22, FF's stock price once fell to less than US$0.8, and had evaporated by more than 94% from the beginning of its listing.
The second shareholder fully supports
In fact, in the process of promoting the agreement between FF and the major shareholder FF Top, the company's second largest shareholder, Season Smart, also played a role.
htmlOn August 24 and September 10, Season Smart sent two letters to the FF Board of Directors expressing support for FF Top. Season Smart said that FF's current financial situation is a very concerning issue. At the same time, he was extremely disappointed with the clause announced by FF, and believed that the clause was extremely unfavorable to the company and would also constitute a significant dilution to the company's shareholders.Season Smart believes that FF Top has the right to remove Brian Krolicki, and the quick execution of the removal is also the clearest way to restore order on the board.
Previously, at the end of August, FF refuted the power of attorney submitted by FF Top. FF believes that the FFGP entity distorts many facts in its power of attorney, including distorting the rights of FF Top under its shareholder agreement with FF.
htmlOn September 22, FF issued another statement saying that the company's board of directors was affected by false information publicity in raising funds to support FF91 production.FF said that the false information accused some directors of the company of the company of unnecessarily bankrupt for personal gain, and at the same time, external threats starting with litigation have escalated into personal violence and even death threats to certain senior staff and directors.
But just a few days later, FF announced that it had reached an agreed governance resolution with FF Top.
Specifically, FF Top will withdraw its lawsuit against FF and its board of directors, and Sue Swenson will resign from FF’s executive chairman and board chairman after receiving a net financing of $13.5 million, Sue Swenson and Brian Krolicki will resign from the board of directors after receiving a $85 million incremental financing commitment and a $35 million net financing.
received new financing of US$100 million
Jia Yueting and his partner team regain control?
In addition, FF also announced on the same day that it would implement two financing agreements, with a total amount of new financing commitments of US$100 million.
Under the first financing agreement, FF will receive $40 million in recent financing in the form of convertible secured notes and warrant exercise payments, subject to certain prerequisites.
Under the second financing agreement, FF will receive additional near-term financing of US$60 million from a wholly-owned subsidiary of Senyun International Ltd., Daguan International Ltd., in the form of a convertible secured notes, subject to relevant conditions.
FF said the company is in discussions with potential investors to finance the additional funds needed to operate by the end of 2022 and beyond. As part of the ongoing cash savings and spending reduction efforts, FF has recently implemented measures to reduce employees and other expenses and delay payments, and the company may take measures such as further reductions in employees.
After a period of game, the internal governance disputes within FF finally ended with the victory of the major shareholder FF Top. According to the agreement, FF Top and its affiliates will also control FF’s board of directors in the future.
It is worth noting that in the documents submitted by FF to US Securities and Exchange Commission , the person who signed on behalf of entities such as FF Top, FF Global and Pacific Technology is Wang Jiawei, with the position as president, and Wang Jiawei's other identity is the nephew of FF founder Jia Yueting.
This shows that Jia Yueting and his partner team have regained control of the company. However, as the founder of FF, Jia Yueting's current shareholding ratio has dropped to less than 1%.
In April this year, Wang Jiawei, then vice president of FF's global capital markets, resigned from the company's position to the board of directors after being suspended for three months. Now, Wang Jiawei returned to FF as the controlling shareholder. Similarly, although Jia Yueting no longer held FF's equity in the bankruptcy of reorganization of , his voice in FF still exists. For example, in the official press release released by FF on September 26, the accompanying picture is a photo of Jia Yueting and FF 91.
htmlOn September 27, Jia Yueting also posted on Weibo, saying, "Resetting things right and returning to the right track is another major turning point in FF. I sincerely thank all the investors, partners, company executives and employees who have worked together to save FF.".1 billion US dollars in financing can save FF91?
However, financing of a total of US$100 million seems to be difficult to support the mass production of FF91.
Previously, FF stated in its interim report that compared with the forecast before the business merger in July 2021, FF's costs have been increasing, including increased construction and labor costs, rising raw material prices, shortage of semiconductor chips, tariffs, increased costs related to the global COVID-19 epidemic, and rising costs caused by related supply chain restrictions. FF expects that significant operating losses will continue to occur in the foreseeable future.
FF announcement shows that as of September 21, 2022, FF's cash in the United States was US$33.5 million, including US$2.1 million in restricted cash. According to its latest forecast, operating cash consumption between September 1, 2022 and December 31, 2022 will be approximately US$293 million, and approximately US$708 million for the full year of 2022.
To promote the smooth mass production and delivery of FF91, FF is still trying to discuss financing with potential investors for additional funds needed to operate by the end of 2022 and beyond.
In addition, as part of the ongoing cash saving and spending reduction efforts, FF has carried out layoffs and other spending reductions and delayed payment measures.
. According to the financial situation and market conditions, FF may take further measures, including further layoffs.
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Editor of this issue Liu Xueying Intern Mei Lexuan
