(Yicai Global) Dec. 5 -- Faraday Future, the US-based electric vehicle startup founded by Chinese entrepreneur Jia Yueting, is facing a serious cash flow crisis, but the company is confident of resolving the issue within three months.
Faraday Future will soon file a request for emergency relief procedures with the main arbitration tribunal, which the Hong Kong International Arbitration Center will set up, the company said in a statement today. But any ruling may be delayed for two to three months, so the company's cash flow issue will continue, it added.
The Los Angeles-based automaker must take further cost-saving measures to overcome the current financial situation, including sending staff on unpaid leave, it said. The company still has around 1,000 staff worldwide.
Faraday Future has made major progress in equity financing, the statement said, adding that global investors with different backgrounds think highly of the core value of its products, technology and team and have shown strong interest in the company. That is why the company is confident of solving its funding problem within three months.
The breakdown in relations between Jia and Faraday Future's major shareholder Evergrande Health has worsened the carmaker's financial status since October. The company faces a cash crunch due to investor default, stemming from Evergrande Health's refusal to pay investment funds. Evergrande has also refused to lift the lien on Faraday Future's assets according to contract, making it difficult for Faraday to access short-term financing through mortgage, the firm noted in its statement.
Evergrande Health has yet to comment on Faraday's statement.
The most recent clash between the two parties was due to Faraday's request to the HKIAC to lift Evergrande Health's lien on assets so as to pave the way for asset financing.
According to a statement issued by Evergrande Health on Nov. 29, Season Smart, a unit of Evergrande Health, received a ruling from HKIAC's emergency arbitrator, which dismissed the joint venture's request to remove Season Smart's lien on the JV's assets. The JV was formed by Season Smart and Faraday's original shareholders.
The request will be transferred to the upcoming main arbitration tribunal, an insider told Securities Daily in response to Evergrande Health's statement. After receiving its request, the HKAIC told Faraday Future that the main arbitration tribunal will be formed within two weeks, and the request will be transferred to it, Faraday added.