Faraday Future struggles to keep employees after legal battle ends
Jan.9 (NBD) -- U.S. electric vehicle start-up Faraday Future (FF) tries to retain employees of FF Beijing unit after settling the two-month dispute with the major investor Evergrande Health.
Staff of FF China is offering two options, staying at FF or transferring to companies of Evergrande Health. FF's Beijing employees are also asked to pick sides.
The Beijing company, which focuses on technology R&D and has core technology of FF, is closely tied to the U.S. firm.
FF promised share options and the original salary level to workers if they choose to stay. However, the majority of employees in the Beijing unit decided to join Evergrande last Wednesday.
An employee explained that considering the situation of FF, staff in Beijing is afraid of salary reduction or suspension. After all, they have families to support and mortgage to pay. So many people chose Evergrande.
But five days later, the Beijing team was persuaded to stay at FF after confirming the salary level will not be changed.
On December 31, 2018, FF and Evergrande Health entered a restructuring agreement under which Evergrande's wholly-owned Hong Kong unit Season Smart will hold 32 percent of preference shares in the joint venture Smart King, and gain ownership of 100 percent shares in Evergrande FF Holding (Hong Kong) Limited, a subsidiary of the joint venture, together with other rights under the agreement.
An internal letter revealed some details of the new contract. Evergrande Health will take control of FF factory in Nansha District of south China's Guangzhou and all patents, equipment, trademarks and the original team will be returned to FF.
Besides, Smart King is allowed to raise funds and FF CEO Jia Yueting can buy back the 32 percent stake from Evergrande Health within five years.
This indicates that Jia Yueting finally maintained the ownership of FF.
In June last year, Evergrande agreed to take a 45 percent stake in Smart King for 2 billion U.S. dollars in funding with initial payments totaling 800 million U.S. dollars paid through 2018 and the remaining 1.2 billion U.S. dollars paid over time.
A person familiar with the matter said not all the promised 800 million U.S. dollars was given to FF and only less than 500 million U.S. dollars were used, with part for bidding for the land of FF plant.
The dispute between the two parties began in early October, 2018.
FF commenced arbitration in Hong Kong and accused Evergrande of breaching funding obligations. Evergrande claimed that it didn't provide other capital injection FF asked in July, because the electric car maker failed to fulfill the payment conditions listed in the following document signed between the two parties.
Though FF has cleared the path for fund raising through the latest deal, it still has a tough road to go.
As of May 30, 2018, the unaudited book value of Smart King and its subsidiaries was registered at approximately 111 million U.S. dollars, with unaudited loss for 2016 and 2017 reaching 570 million U.S. dollars and 340 million U.S. dollars, respectively.