Rich again! FF received another financing commitment, and Jia Yueting apologized for the delay in delivery just a week ago

Source of this article: Times Finance Author: He Qing

Jia Yueting and Faraday Future (FF) pulled in again the financing.

On the evening of June 27, FF officially announced that it had received a financing commitment of up to US$105 million. "FF announced additional financing commitments of $90 million and existing financing commitments of $15 million paid in advance," the announcement said. FF said these financing commitments will support the continued production and delivery of the FF 91 electric vehicle.

It is worth mentioning that a week ago, Jia Yueting issued an apology on his social platform for the delay in the delivery of the second phase of FF 91 on June 21. It said that there were several deeper systemic reasons for the delay in delivery, namely the insufficient industrialization capacity and insufficient financing capacity of the FF team. He added, "As long as there is reasonable capital investment, we are confident that the overall ability of FF's new and old industrialization teams will be rapidly improved." ”

On June 28, Zhang Yi, chief analyst of iMedia Consulting, told Times Finance that "FF mainly operates in the United States, and the United States has no advantages in the production of electric vehicles or smart cars, and the cost is extremely high." Secondly, the sales scale of the US electric market is not as large as China, and with the current layout of FF, we are quite worried about whether it can be done. ”

Image source: FF

Bounced the ticket again, and Jia Yueting apologized urgently

It took less than a month from the official announcement of phased delivery, to the announcement of delayed delivery, to Jia Yueting's apology and financing needs, until the new financing commitment was obtained again on June 27.

On May 31, FF officially announced the phased mass production and delivery at the final press conference.

However, on June 17, FF said that the second phase of delivery was adjusted from the end of the second quarter of 2023 to August 2023. In addition, FF Company also proposed a capital operation plan to encourage shareholders to approve the Board's proposal for a reverse stock split of the Company's common stock to support the Company's financing of $300 million.

On June 21, Jia Yueting apologized on his social platform: "The delay in the second phase of delivery reflects that the FF team's industrialization ability and financing ability need to be improved. ”

Just like FF's previous old plot of skipping tickets several times, Jia Yueting proposed new financing needs. "Now as long as new funds are available, we can quickly achieve production capacity and sales climbing, revenue growth, and rapid value improvement, which is different from the money-burning model of other new force car manufacturers, and realize a positive cycle of less investment and high returns, maximizing the interests of shareholders and investors." Jia Yueting said.

It also explains the reason for the merger, "The purpose of the merger is to quickly change the low stock price status and pave the way for the introduction of large institutional investors." Large investment institutions pay little attention to companies with stock prices below $5, but because the current stock price is too low, it is difficult to introduce large institutional investors, coupled with FF's long-term low cash flow operation, which seriously affects the improvement of the company's operating fundamentals, and it is difficult to achieve a sharp rise in the stock price in the short term and maintain a stock price above $5 or even higher. This is completely different from the starting point and urgency of our previous questionnaire on the minimum share price of $1 issued by the FF community to meet NASDAQ compliance requirements. ”

On the evening of June 27, a week after Jia's long paper was sent, FF announced additional financing commitments of $90 million and existing financing commitments of $15 million paid in advance. The round was led by existing investor ATW Partners with participation from Senyun International. These financing commitments include both secured and unsecured categories. Unsecured financing commitments are subject to certain conditions, including the validity of the registration statement and approval by FF shareholders.

FF said these financing commitments will support the continued production and delivery of the FF 91 electric vehicle and help the company achieve its long-term strategic goals, including expanding production, further improving its sales and service system, global business development, and improving general day-to-day operating cash flow.

"This funding is very helpful for FFIE to achieve its near- and medium-term strategic objectives." Chen Xuefeng, CEO of Faraday Future, said.

Does the delivery of bounced tickets hinder financing?

Although FF has delivered bounced tickets several times, Jia Yueting always seems to be able to pull financing.

According to incomplete statistics, since the beginning of this year, FF has announced three times to raise funds.

On February 6 this year, FF announced a $135 million financing. At the time, FF said, "This round of financing, together with the $33.4 million received by the company following the FF Global Investor Business Update Conference held on December 15, 2022, indicates that the company has received all the financial commitments required to mass produce FF 91 Futurist SOP, provided that the funds are received in a timely manner." After the Company receives full financing as expected, the Company 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 by the end of April. ”

On May 10, FF announced the completion of a US$100 million funding round, led by the managing partner as the cornerstone investor. FF announced the signing of a definitive agreement on $100 million of unsecured convertible debt. The proceeds from the financing are expected to support the continued ramp-up of production and the development of the sales and service system of the flagship FF 91.

Coupled with this additional financing commitment of US$90 million, FF may have raised US$325 million in financing or commitments (approximately RMB 2.354 billion) during the year.

In the eyes of industry insiders, although FF has once again received new financing, its product scale delivery still faces challenges.

As early as 2021, NIO CEO Li Bin said when talking about car manufacturing funds, "Car building needs to reserve the capital threshold, a few years ago I said 20 billion, now without 40 billion may not be able to do it." ”

In addition, FF itself still faces funding problems. In the previous long article, Jia Yueting did not avoid the problem of FF's long-term low cash flow operation. According to FF's first-quarter financial report, FF achieved net income of $6.5 million and a loss of $153.1 million in the first quarter. As of March 31, 2023, FF held only $33 million in cash, including $1.5 million in restricted cash.

At the same time, FF shares are also difficult to say optimistic, as of the close of trading on June 27, Faraday Future (FFIE) is trading at $0.237 per share, with a market value of $330 million.

"FF has delivered several bounced tickets, and it is not yet known whether its financing will be available. However, in the face of such a fierce new energy vehicle market, it is still difficult for FF to turn over. Zhang Yi told Times Finance, "For FF, it is the most important thing to make products, achieve mass production, and let the market accept them." ”