Shanghai (Gasgoo)- The EV startup Faraday Future (FF) is seeking arbitration to terminate the stake transaction with Evergrande Health Industry Group Limited (Evergrande Health), the healthcare company announced on October 7.
Evergrande Health, a subsidiary of the real estate developer China Evergrande Group, claimed in June that it has acquired 100% stake in the Hongkong-based Season Smart Limited (Season Smart) with HK$6.746 billion plowed.
The latest announcement showed that Season Smart and FF's previous shareholder (a British Virgin Islands entity called FF Top Holding whose actual controller is Jia Yueting) signed an agreement on November 30, 2017, which said Season Smart agreed to pour a total of $2 billion in Smart King, a joint venture (JV) between Season Smart and FF Top Holding. The investment will be implemented in three installments, due in 2018 (for $800 million), 2019 (for $600 million) and 2020 (for $600 million) and will make Evergrande Health indirectly obtain 45% stake in Smart King.
However, Evergrand Health revealed on the October 7's statement that Season Smart was requested by FF Top Holding in July to pay $700 million up front after the latter had run out of Smart Season's initial investment of $800 million.
The Chinese healthcare firm said FF's previous shareholder has filed arbitration at the Hong Kong International Arbitration Centre against Evergrande Health, saying payment conditions were not fulfilled.
The filing also said FF Top Holding is seeking to deprive Season Smart of the right as Smart King's shareholder to approve relevant financing plans and intends to terminate all other terms.
Nevertheless, Evergrande Health stressed that Season Smart has performed all obligations under relevant agreements, while Smart King's arbitration request has severely harmed the rights of Season Smart and its shareholders. It will take all necessary steps to safeguard its continuing rights under related terms.
“The only reason 'FF is trying to get out of the deal with Evergrande,' is because Evergrande has failed to live up to its end of the bargain and make the payments it agreed to make. This is a matter of basic, common-sense fairness- Evergrande shouldn’t be permitted to withhold the funding and simultaneously prevent FF from accepting alternative financing or investments,” FF delivered the explanation via its Twitter a few hours ago.
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