Jan. 2 (NBD) -- The months-long battle between embattled electric car manufacturer Faraday Future ("FF") and Evergrande Health Industry Group Limited ("Evergrande Health") has come to an end.

The California-based carmaker made an announcement on the last day of last year saying that the company has signed a new cooperative agreement with its investor Season Smart, and all the original agreements between them have been terminated with immediate effect. 

In a similar announcement on the same day, Evergrande Health, the owner of Season Smart, noted it has entered into a restructuring agreement with Season Smart, Smart King Ltd. (the joint venture between Season Smart and FF) and other relevant parties.

Under the agreement, all parties agree to withdraw and waive all current litigations and arbitration proceedings, and all rights to any future claims.

Meanwhile, Season Smart's investment in Smart King Ltd. is restructured as follows: ownership of 32 percent (on a fully-diluted basis) preference shares in the joint venture as well as ownership of 100 percent shares in Evergrande FF Holding (Hong Kong) Limited, a wholly-owned subsidiary of Smart King Ltd., together with other rights under the restructuring agreement, at an aggregate consideration of 200 million U.S. dollars. 

This means Evergrande Health is no longer the largest single shareholder of FF and the dispute between the two companies is over.  

Photo/Dfic

Industry insiders commented the peaceful settlement is as expected since that FF cannot advance the FF91 project without money or get through the financial crisis simply by job cuts. 

One of the insiders explained to China Entrepreneur Magazine a collapse of cooperation would deal a heavy blow to FF's normal operation and affect the mass production of the FF91. In that case, Evergrande Health couldn't get any economic benefits in return, and its earlier investment would probably end up yielding nothing. 

As shown in the restructuring agreement, as all the original agreements have been terminated, Season Smart will no longer be required to make additional investment into Smart King Ltd. This makes securing new investments the most pressing task to FF's founder Jia Yueting at present.  

As at May 30, 2018, the unaudited book value of Smart King Ltd. and its subsidiaries was approximately 111 million U.S. dollars. The unaudited loss attributable to Smart King Ltd. and its subsidiaries for the financial years ended 2016 and 2017 stood at 568.0 million U.S. dollars and 340.0 million U.S. dollars, respectively. 

In its statement, FF claimed great process in equity financing is expected in the near future. A number of investors have expressed interest in investing in the electric car manufacturing, with some having already launched due diligence. And the company will likely make great headway in debt financing as all security have been released.

Currently, FF is going to great lengths to promote the volume production of the FF91. 

According to Jia Yueting, an additional investment of 500-600 million U.S. dollars could help FF mass-produce and deliver its first model. 

At the Evolution Strategy Communication Meeting held at FF's Los Angeles headquarters in mid-November, Jia unexpectedly revealed the intention to bring the initial public offering plan forward to 2020. 

Pursuant to the financing plan, the cash-strapped carmaker expects to complete a 500-million-U.S. dollar Series A+ financing round by the end of the first quarter of 2019 so as to fund the delivery of the FF91 as well as the research and development of its second model, the FF81. And a Pre-IPO financing round worth 700 million U.S. dollars is expected at the end of this year to support the volume production and delivery of the FF81 and the company's subsequent development. 

In the eyes of many industry insiders, Jia's plan is just a pie in the sky. A former senior executive with FF told Yicai the company is now a shell and many top talents, including two of FF's founding members, have already left the company. 

Data from the troubled carmaker shows the company currently has a workforce of around 1,000 employees globally, of which nearly 500 are based in the U.S.

Email: lansuying@nbd.com.cn