IT House Feb. 6 – California-based Faraday Future today announced a series of definitive financing agreements, as well as significant changes to key provisions of the warrant terms in the original FF secured financing agreement.
Faraday Future said that upon successful execution on time, the company will raise all the necessary funds for the FF 91 Futurist to begin mass production ("SOP"). At the same time, the Company announced that it is scheduled to hold an extraordinary general meeting of shareholders on February 28, 2023.
IT House understands that Faraday Future has announced arrangements for the execution of a definitive agreement for a US$135 million (currently approximately RMB917 million) convertible guaranteed note financing, subject to the satisfaction or waiver of relevant conditions. Of this amount, US$80 million (currently approximately RMB543 million) will be credited within 10 business days (including US$10 million previously provided by Senyun International Ltd. as an advance payment) and the remaining funds will be received within 5 business days of meeting or waiving the relevant conditions, including receipt of shareholder approval from the Company and a valid registration statement of the applicable shares. ATW Partners' affiliates and investment institutions such as Acuitas Capital participated in the transaction.
According to reports, this round of financing, together with the $33.4 million received by Faraday Future after the "FF Global Investor Business Update Conference" held on December 15, 2022 ($30.6 million after deducting the original discount and transaction costs, including the $10 million previously provided by Senyun International Ltd. as an advance payment), indicates that the company has received all the financial commitments required to mass-produce FF 91 Futurist SOP, The premise is that the funds arrive in a timely manner. After receiving full financing as expected, Faraday Future expects to begin mass production of the marketable FF 91 Futurist by the end of March 2023, roll off the production line in early April, and deliver it by the end of April.
In addition, Faraday Future said it plans to convene an extraordinary general meeting on February 28, 2023, to consider a proposal for additional authorization to issue the Company's Class A common shares. The proposal, if approved by FF's shareholders, will clear the way for additional ongoing financing in the future, which will best support FF 91 Futurist mass production delivery and the achievement of the Company's other strategic objectives. FF Top Holdings LLC, a subsidiary of FF Global Partners LLC (FFGP), as the majority shareholder of the Company, has agreed to vote on all of the shares beneficially owned at the upcoming extraordinary general meeting in support of the proposal. Faraday Future also recommends that all shareholders vote in support of the proposal by January 31, 2023, and solicit proxies to support the proposal. The approval of FF shareholders is conditional on the completion of the above part of the financing and is a critical path to support the company's long-term strategic objectives.
Faraday Future noted that the funding round also includes significant changes to the key terms of the warrants in the original FF secured financing agreement. In such warrants, there is a full ratchet anti-dilution clause that allows investors the right to purchase additional shares at a minimum price equal to the shares issued after such warrants are issued. The provisions have been removed from the warrants in the financing agreement, helping FF shareholders successfully avoid future dilution that could result in the issuance of hundreds of millions of additional shares. The Company also agreed to issue $41 million of convertible secured notes to investors in the existing secured notes in exchange for their cancellation of a substantial portion of their previously outstanding warrants.
"Raising $135 million is an indispensable resource for the final production delivery of FF 91 Futurist sprint, and these additional funding commitments provide a shot in the arm for FF to reach the SOP milestone in March 2023." Chen Xuefeng, CEO of FF Global, said, "With these expected funds in place, we will surely achieve the mass production delivery of FF 91 Futurist with high quality and high product strength as soon as possible. ”
With this round of financing, Faraday Future says it is approaching the seventh milestone in manufacturing, known as SOP. Faraday Future previously announced that it had reached the sixth milestone in manufacturing, namely the completion of construction and equipment installation in the vehicle assembly area. This marks the completion of six of the seven milestones that FF established in late 2021.