Jia Yuetings life and death time: FF91 mass production time to postpone

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 Jia Yuetings life and death time: FF91 mass production time to postpone


Reporter Lu Xiao reports from Beijing

Originally thought that getting Hengdas investment would make FF (Faraday Future), an electric vehicle company founded by Jia Yueting, turn salty fish over, but breaking up with Hengda has plunged it into a deeper financial crisis.

On October 31, FF sent a report to the China Times that FF is facing serious cash flow difficulties due to the default of Hengda Health (00708.HK). In order to reduce expenditure, FF will temporarily let some employees stay without pay, only to promote the production of FF91 to retain 500 core employees. In addition, two core executives of FF have resigned recently, including Nick Sampson, one of the three co-founders of FF.

The expected interim period of FF is about two months. Is two months enough for FF to find new financing that will allow Hengda to nod? With the exhaustion of FF funds, what kind of fate will FF emphasize on the mass production of FF91?

Desperately throttling

Before the new financing is in place, throttling becomes the only effort FF can make.

In an internal letter sent on October 31, FF said that most of its employees who joined FF after May 1 this year would be suspended in November and December. Employees who joined the company before May 1 this year will remain in the company to promote the delivery of FF91 production, but wages need to be temporarily lowered.

FF also said that all employees will continue to enjoy the original welfare benefits such as medical insurance. According to the reporter of China Times, FFs core team consists of more than 500 employees, mainly for the project research and development, manufacturing and supply chain team to complete the mass production and delivery of FF91.

In response to the financial crisis, FF announced a layoff and salary reduction plan in October 21st. FF announced that the annual salary of all staff will be reduced by 20%. Meanwhile, Jia Yueting himself will only receive one dollar annual salary. The company promised to restore the original salary after the capital was in place. According to a previous announcement issued by Hengda Health, FF had nearly 1 400 employees worldwide as of June 2018, of whom more than 1,000 were technical professionals.

What needs to be mentioned is that once again trapped in financial difficulties, FF has core executives leaving. On October 30, Nick Sampson, one of the three co-founders of FF, announced his resignation. So far, only one of the three founders of FF is Jia Yueting. According to reporters, Nick Sampson is FF senior vice president of global products. In addition, Peter Savagen, senior vice president of global R & D at FF (PeterSavagian), has left.

According to FF, Hengda Healths recent series of defaults have led to serious cash flow difficulties for FF. Hengda Health, as the largest shareholder, has undermined FFs capital planning and prevented FF from using its own assets as collateral for financing.

The rift between FF and Hengda was made public after more than three months of formal announcement of cooperation.

On Oct. 7, Hengda Health announced that FF Top Holding Ltd., the original shareholder of FF, actually controlled by Jia Yueting, had manipulated Smart King, the joint venture company, by taking advantage of its majority of directorsseats in the joint venture. In addition, Smart King filed an arbitration with the Hong Kong International Arbitration Centre on October 3 to deny Evergrande Healthys wholly-owned Shiying Company the right of consent to financing as a shareholder, as well as to cancel all agreements and deprive Shiying of her rights under the relevant agreements. At present, Hengda health ranks 45% in the largest shareholder of FF.

Seek financing urgently

Finding new financing is the top priority of FF. Some media quoted Nick Sampsons resignation letter as saying: The companys financial and personnel assets are virtually insolvent.

Prior to the FF and Hengda health emergency arbitration results released, for FF to find new financing possibilities.

On the evening of October 25, Evergrande Health announced that as a temporary relief measure, in order to support SmartKings business development and protect the common interests of shareholders, the arbitrators agreed that SmartKing should conduct strictly conditional financing, in which the valuation of new stock financing should not be lower than Shiyings post-investment valuation, Shiying has the priority to buy new shares. FF should not exceed $500 million in foreign financing before final arbitration.

Some people close to Hengda told the Chinese Times that the purpose of the emergency arbitration was not to let Jia Yuetings company go bankrupt, which would be different from the official result. But the new financing must be approved by Hengda, and Hengda has the right of preemption. The person also told reporters that Hengda Faraday is currently functioning normally.

But FF stakeholders told the China Times, There is only one appeal for this emergency relief, that is, to open up the financing of $500 million. For Hengdas request for the complete deprivation of Hengdas right of financing consent, this is the content of the big arbitration. The result of this arbitration will take 6-18 months to produce a result.

However, although the results of the emergency arbitration came out, the war between Hengda and FF was getting worse. Recently, FF and Hengda have accused each other of confusing the public and misleading the public. Many industry insiders believe that the entanglement between Hengda and FF will affect the entry of FFs new financing.

In an internal letter dated October 31, FF listed a series of technical patents it had obtained, which it considered to be the competitiveness and value of FF. But for investors, a more intuitive chip is the mass production of FF91. According to the China Times reporter, FFs previous plan was to achieve FF91 mass production in the first quarter of 2019. In fact, after disclosing the contradiction with Evergrande, FF still said in its previous internal letter that it has the ability to deliver FF91 to the global market and subscribers in 2019. But FF, which runs out of funds, does not seem to be able to complete the plan as scheduled. It was reported that FF management decided to close its headquarters in Gardiner, California, and part of its Hanford plant. And FF stakeholders also told China Times that the production time of FF91 next year should be affected, but the time is not very good to say. We should wait until we get the financing before we figure it out. Another question that needs to be mentioned is, if FF91 can not be mass produced, can Jia Yueting retain the voting right of one share, 10 votes currently enjoyed by the joint venture company? Source: Zhang Zutao, editor of Huaxia times: _NT5054

In an internal letter dated October 31, FF listed a series of technical patents it had obtained, which it considered to be the competitiveness and value of FF. But for investors, a more intuitive chip is the mass production of FF91. According to the China Times reporter, FFs previous plan was to achieve FF91 mass production in the first quarter of 2019. In fact, after disclosing the contradiction with Evergrande, FF still said in its previous internal letter that it has the ability to deliver FF91 to the global market and subscribers in 2019.

But FF, which runs out of funds, does not seem to be able to complete the plan as scheduled. It was reported that FF management decided to close its headquarters in Gardiner, California, and part of its Hanford plant. And FF stakeholders also told China Times that the production time of FF91 next year should be affected, but the time is not very good to say. We should wait until we get the financing before we figure it out.

Another question that needs to be mentioned is, if FF91 can not be mass produced, can Jia Yueting retain the voting right of one share, 10 votes currently enjoyed by the joint venture company?