(Yicai Global) Nov. 14 -- The reason why Evergrande Health Industry Group did not give Faraday Future the cash injection that was promised in July is that it got to know that the US electric car firm's Chinese forex account is frozen, a source familiar with the matter told Yicai Global.
Faraday Future's founder and Chief Executive Jia Yueting did not tell Evergrande that the startup has violated China's foreign exchange regulations, the source said, adding that the money that Evergrande gave earlier has been spent to pay wages.
Evergrande was supposed to provide a USD700 million cash injection in July, but the investor refused to cough up as it considered that requirements laid out for the funding were not met.
The car firm's China unit is paralyzed while China is precisely the most important production base and future market for it, the source added. The California-based startup had to lay off hundreds of employees last month due to financial distress.
The Chinese government has forbidden Jia to take up loans and even buy train tickets in China since he failed his debtors with a previous tech endeavor called LeEco and escaped to the US last year to pursue his next dream.
Evergrande sought global control of Faraday Future, which violated its bottom line and neither the company nor its management team can accept it, Jia said at a strategy briefing on Nov. 12. Evergrande did not respond to this as of press time.
The company will use up all its cash reserves by the middle of next month without new investments, an insider said at Faraday's plenary meeting. The reserves will maintain the firm's approximately 600 employees till the end of this month, the insider added.
Editor: Emmi Laine