Sputtering start-up of electric vehicles Faraday Future has fired dozens of employees who have had unpaid leave for months, including production staff hired to staff the company's plant in Hanford, California, The edge has learned. The employees received benefits during this leave, which started at the end of 2018, and it was already extended once. But the newly fired employees will see that those benefits expire on June 30, according to termination papers from a former employee who was declared anonymous because of a confidentiality agreement with the company.
In addition, Faraday Future's vice president for product, technology and IP strategy, Jeff Risher left the company earlier this year, The edge has learned. Risher came to Faraday Future from Tesla, where he was Deputy General Counsel and Chief IP Counsel for two years. Risher also spent almost a decade at Apple. He did not respond immediately to a request for comment.
John Schilling, the spokesperson for Faraday Future, confirmed the cuts and the departure of Risher in an email to The edge. "Most" of the hundreds of employees on leave had already "left" alone, Schilling said, but the company has made new cuts in recent days. He said that some workers are still on leave, but would not say how much. "I can't exactly share the number of hired workers we have released or their roles at the moment, but the company still has more than 350 active employees in the US," he wrote. Faraday Future had approximately 1,000 employees in the United States by mid-2018.
The new cuts came after the startup had made two spectacular but demanding financing announcements earlier this year. In March, the California car manufacturer in California announced a joint venture agreement with Chinese mobile gaming company The9 to make EVs in China, the latter claiming it would contribute up to $ 600 million to the project. And in April, Faraday Future announced that it had signed an investor willing to include up to $ 225 million in its stalled US operations.
Both deals, however, came with reservations The edge previously reported. The Chinese gaming company only had a market capitalization of about $ 100 million at the time of the announcement. It also does not have to deliver the first $ 200 million installment for a few months, according to the terms of the deal. Even then, the money from The9 goes mainly to the new joint venture in China.
The different Faraday investment The recently announced future came in the form of bridge financing (or a short-term loan) from the Chicago-based Birch Lake Associates company, known for its restructuring and bankruptcy. And while Faraday Future raised the ceiling of the $ 225 million deal, the startup has only got a fraction of it so far. The initial installation The company recently said it was received from Birch Lake, which is only worth $ 15 million, according to a previously unreported deed filed at the Los Angeles County writer's office.
It is not clear how much Faraday Future has received from one of these deals so far, but part of the money is probably used to pay the debts of the company. While the startup was struck with 11 new suppliers and contractors lawsuits between October 2018 and February 2019, four are now awaiting settlement, three are currently being fired and one has been moved to arbitration, according to Los Angeles County records Superior Court.
That said, Faraday Future's debts have also risen in recent months. The chief financial officer of the startup claimed that suppliers and contractors owed "more than $ 59 million" by the end of September 2018, according to court documents discovered by The edge. But the company recently told Fresno & # 39; s Business Journal that it is now closer to $ 160 million. Faraday Future managers have also said internally that the company needs at least $ 500 million to get its first car, the FF91 luxury SUV, into production.
Faraday Future was in this most recent financial ditch after most of 2018 fought with the Chinese real estate conglomerate Evergrande, which saved the startup of a bankruptcy. Evergrande has pledged $ 2 billion to Faraday Future in exchange for a 45% stake in the startup at the end of 2017. But Faraday Future founder and CEO Jia Yueting spent the first $ 800 million installment ahead of schedule. Evergrande agreed to advance part of the remaining balance of the investment, but only if Jia relinquished control of the company.
The two parties then conspired for months, and in the meantime Faraday Future ran out of money. The start-up fired employees by the end of October and reduced salaries across the board to stay afloat. One of the two remaining co-founders has resigned, along with a number of other key figures. Faraday Future then placed hundreds of employees on unpaid leave and expanded that leave by hundreds more in December.
Faraday Future and Evergrande eventually mentioned a ceasefire on the last day of 2018. Evergrande reduced its stake in the company to 32 percent and enabled Faraday Future to find new investors. When it searched for backers, Faraday Future sold its headquarters to free some cash in the short term and also put the land it owns in Nevada – where the company once wanted to build a $ 1 billion factory – up for sale. However, Birch Lake holds that land as collateral.