Faraday Future’s major shareholder FF Top executes a Term Sheet for up to $600M

Written by Cláudio Afonso | info@claudio-afonso.com | LinkedIn | Twitter

EV startup Faraday Future Intelligent Electric announced Monday that its major shareholder FF Top Holding executed “a non-binding term sheet for a proposed convertible term loan facility” to raise up to $600 million. Last week, the company filed a 8-K form saying it will delay the start of production and the first deliveries of the FF91, the first model for the California-based company.

The mass production was scheduled to start this month and is now delayed to the third quarter or the fourth quarter of the year depending on when the company can secure additional funds.

FF Top will now identify investors (not affiliated with them) to participate in the Proposed Financing in two tranches, each up to $300 million. Faraday Future’s major clarified that it “does not expect to purchase any Notes for its own account” and “does not anticipate having any control over or investment in the Potential Lead Investor”.

FF Top does, however, anticipate providing reasonable downside protection to the Potential Lead Investor by pledging a to-be-determined portion of its shares of Common Stock to the Potential Lead Investor in support of the Notes investment contemplated to be made through the Potential Lead Investor, and also sharing with the Potential Lead Investor in any appreciation in the Potential Lead Investor’s investment pursuant to the Proposed Financing.

“First tranche note is planned to be funded at closing of the transaction, and investors will have the exclusive option to purchase the second tranche note for a certain period of time after closing,” the company said.

FF Top unveiled that has received non-binding indications of interest from two financial investors that may invest via the Potential Lead Investor and is in discussions with the Potential Other Investors warnings that is nothing confirmed so far.

Last week, the stock tumbled more than 40% to $1.95 during the first minutes of Friday’s session giving the company a Market share value of around $650 million. The EV startup — that in March had only 401 preorders for its first model — has been struggling with internal issues namely the removal of Brian Krolicki from the Board of Directors.

Recently, FF Top Holding delivered a notice of removal of the Top Designee Brian Krolicki from the Board of Directors. Krolicki was the 33rd Lieutenant Governor of Nevada (from 2007 to 2015) and a Board member of Faraday Future since April 2020.

FF Top said recently it has attempted to address the Board of Directors of the EV maker for the “concerns regarding the performance and direction of FFIE under the Board’s leadership” and “hopes that FFIE will constructively engage with FF Top and FFIE’s other shareholders to address these concerns”.