Written by Cláudio Afonso | LinkedIn | X
The U.S. based EV maker Faraday Future announced on Monday that it has entered into a Waiver Agreement with key investors to alleviate its cash payment obligations related to convertible notes, a new SEC filing revealed.
In an interview with the YouTuber “The Omar Gosh Vlogs,” Faraday’s founder YT Jia revealed recently that deliveries would continue on the last day of July. However, the company did not communicated the delivery of the second vehicle as of the time of writing.
The agreement is part of the company’s ongoing strategy to manage liquidity while encouraging note conversions into common stock.
The Waiver Agreement involves holders of both secured and unsecured convertible notes issued under two separate Securities Purchase Agreements (SPAs) from August 2022 and May 2023.
When Faraday Future’s stock price is low, the company can lower the conversion price of the notes, making it easier for investors to convert their notes into shares instead of cash.
If investors agree to give up their interest payments, they will receive more shares. This ensures they get the same total value as the principal plus interest.
Investors will get cash for interest owed when they convert their notes or will have it satisfied with additional shares if the company uses the Full Voluntary Adjustment, according to the filing.
Last week, shareholders approved all the six proposals at the company’s Annual meeting including the crucial reverse stock split that will allow the stock to comply with the Nasdaq minimum bid requirement of $1.00.
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The company founded by YT Jia had previously warned that if the reverse stock split was not approved, it could lead to delisting from Nasdaq making it “impossible” the capital raise in the near future.
After publishing its 10Q form last Wednesday, this Nasdaq listing requirement is now the only one compliance deadline the L.A based startup has.
“And lastly, we believe that the approved proposals could help support the development of a beneficial China-US automotive industry bridge strategy and could help accelerate our entry into the UAE, both of which we have mentioned in the past,” he concluded.
On Wednesday, few hours before holding a Annual General Meeting, Faraday Future published its first quarter financial results reporting a revenue of $2,000.
In the report of the financial results, the company said it will “keep working to optimize operations to support sustainability” including “ongoing evaluations of current cost reductions and spending efficiency”.
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Written by Cláudio Afonso | LinkedIn | X
