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Electric-car startup
Faraday Future Intelligent Electric Inc.
has secured up to $100 million in new financing to fund operations after reaching a deal with one of its largest shareholders to resolve a monthslong governance dispute.
The agreement comes after Faraday said last week that its company leaders were facing death threats and a misinformation campaign as they sought to raise money for the production of its first vehicle.
Shares of Faraday jumped more than 20% to 95 cents in morning trading. The stock is still down more than 80% this year.
The deal reached Monday with investor FF Top Holding LLC paves the way for the departure of two of Faraday’s board directors, including its executive chair, once the company receives financing proceeds.
Faraday also said it had separately secured up to $40 million in funding from an existing investor and up to another $60 million from Senyun International Ltd., an investment arm of Daguan International Ltd.
The company said it is in ongoing discussions with others to raise more capital, which will be required to fund operations through the end of 2022 and beyond. The company said it may implement cost-saving measures, including layoffs.
Under the deal with FF Top,
Sue Swenson
will relinquish her roles as executive chairwoman of the company and chair of the board once Faraday receives $13.5 million in net financing proceeds, of which $7.5 million has been funded, the company said.
Ms. Swenson and another director,
Brian Krolicki,
will also exit the board after the company receives $85 million in incremental financing commitments and $35 million in net proceeds, the company added. As of Sunday, the company has received commitments for $85 million, none of which has been funded, the company said.
FF Top, which controls about 36% of voting power in Faraday, had in recent months pushed to oust Mr. Krolicki and Ms. Swenson.
Also as part of the deal, Adam He, the chief financial officer of Wanda America Investment Group, has been appointed to Faraday’s board, the company said.
Three directors selected by FF Top will be included on the company’s recommended slate of board appointees, alongside Faraday Chief Executive
Carsten Breitfeld
and three independent directors selected by a committee, at the company’s 2022 annual meeting, which the company has agreed to hold as soon as is legally allowed.
Faraday and FF Top Holding have for months been embroiled in a governance dispute, which reached a peak last week when FF Top sued Faraday in Delaware Chancery Court, alleging that its board “has driven the company into the ground” since merging with a special-purpose acquisition company, or SPAC.
FF Top has agreed to withdraw its lawsuit no later than Tuesday, the company said.
Faraday, for its part, said last week that it has been smeared by a “misinformation campaign of completely baseless allegations that certain directors are conspiring to pursue an unnecessary bankruptcy for their own personal gain.” The campaign, Faraday said, has affected the company’s efforts to raise capital to fund the production of its first car.
Faraday has faced delays to the launch of its flagship FF 91 vehicle. It has also amassed substantial debt and lost top executives to a rival electric-vehicle startup. The company said last month that it would need more funds by early September to continue operations, and it has since focused on reducing costs and preserving its cash position.
Faraday earlier this year said that certain employees and members of its management team had received subpoenas from the SEC regarding an investigation into the startup’s financial statements. The company in June said it had also received a related preliminary request for information from the Justice Department.
Write to Will Feuer at [email protected]
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