(Yicai Global) June 26 -- A Hong Kong-unit of Evergrande Group, China's largest real estate developer by sales, will invest HKD6.7 billion to become the largest shareholder in embattled Jia Yueting's electric car firm Faraday Future.
Evergrande Health Industry Group will acquire stakes in two FF-affiliated firms: all the shares of Season Smart and a 45-percent equity interest in its joint venture with FF called Smart King, the buyer said in a filing to the Hong Kong stock exchange on Monday. Season Smart took a 45-percent stake in Smart King last year for USD2 billion. The Los Angeles-based car firm's original shareholders will keep a 33-percent share while the last 22 percent will be reserved for employees.
FF has A-shares and B-shares. Yueting, with his A-shares, has so far controlled 10-fold the number of votes with each of his stock but if the original shareholders face default, the voting rights policy will turn around to the Guangzhou-based health investment firm's favor.
"Through acquiring world-leading new energy automotive technology and products, Evergrande has the opportunity to obtain a strong competitiveness in the fast-growing new energy automotive industry, capture market share and diversify its businesses," the filing said. The firm proposed to nominate Xia Haijun, vice chairman of China Evergrande, as the chairman of the board of the JV.
FF was founded by Yueting in 2014 to make cars on par with Tesla, but operations in Nevada were shut last year when the entrepreneur's other firm LeEco's liquidity problems spilled. FF reported USD340 million net loss before tax last year, compared with USD569 million in 2016.
LeEco's Shenzhen-listed parent Leshi Internet Information & Technology has defaulted on debt worth billions of yuan and Chinese regulators gave Yueting time until the end of last year to return home to deal with his financial liabilities but the serial entrepreneur has told he will stay in the US to pursue his auto dreams.
The car firm got the green light from a city of Hanford in California to build a factory for the production of FF 91, a luxury electric vehicle, which it plans to roll out at the end of this year. FF has also envisioned a production base in southern China's Guangzhou to start churning latest at the beginning of 2020.
Editor: Emmi Laine