(Yicai Global) Oct. 9 -- Faraday Future, the electric carmaker run by gung-ho entrepreneur Jia Yueting, has responded to reports it wants to scrap a USD2 billion investment deal with a unit under real estate titan Evergrande Group.

The backer bailed on a promised payment in July and is trying to prevent Faraday Future from filling the cash void with alternative financing, the California-based manufacturer said in a statement yesterday. A day earlier, Evergrande Health Indsutry Group said in a Hong Kong Stock Exchange filing that Faraday was seeking arbitration to dissolve their agreement.

Faraday is depending on that money to start mass production of its first vehicle, the FF91, by year-end. If it misses that deadline then per an agreement between the pair, Jia must hand over control of the company to Evergrande Health.

Evergrande Health announced the deal in late June, saying it would take a 45 percent stake to become the biggest stakeholder in Faraday's parent Smart King. Despite its large holding, founder Jia has the most control over the company as he enjoys 10 votes for every share he owns. He has a 33 percent stake.

The original terms stated the backer would pay USD800 million to Smart King by year-end, USD600 million next year and USD600 million in 2020. Evergrande Health made the initial payment in May, but inked an add-on deal in July to make a USD700 million advance on the 2019 and 2020 payments that month, if certain conditions were met, as Faraday had already blown through the first tranche.

Faraday claims Evergrande fully understood where that money went -- toward achieving mass production of FF91 as soon as possible. It believes it has met the conditions for the advance payment, and is unhappy that Evergrande has not allowed it to seek alternative funding. It also scolded the investor for trying to take ownership of its intellectual property.

Evergrande Health claims Faraday failed to meet the conditions of the supplementary deal, and says Jia manipulated the Faraday board to demand the money even though the requirements had not yet been met. Jia denies these assertions.

Jia's Controversy

Jia skyrocketed to fame in China after building LeEco, a vast conglomerate spanning a broad range of sectors from televisions to electric vehicles. This diversity and complexity wound up being the company's downfall as Jia plunged the firm into billions of dollars of debt and fled to the United States to focus on Faraday Future, a company he kept separate from the LeEco web.

Chinese courts have since added him to a credit blacklist, meaning if he does return to the country he will be unable to take out loans, leave the country or even purchase train tickets.

He resigned as chairman of LeEco's listed arm in July 2017 and handed over the reins to Sun Hongbin, chairman of white knight investor Sunac China Holdings, which became the group's second-largest shareholder after Jia when it invested USD2.2 billion in January 2017.

Sun resigned from the post and board in March this year after describing the investment in Leshi as his only regret in life. Sunac executive Liu Shuqing took over as interim chairwoman and signed up to the role full time in April this year.

Editor: James Boynton