Faraday has arguably been better known for its financial woes than for its products in recent years. Founded in 2014 by Chinese technology entrepreneur Yueting Jia, the company launched with lofty goals which included outcompeting incumbent Tesla Inc. in the electric vehicle market.
Although Faraday spun the bankruptcy plan’s approval last year as a win for the company, many remained skeptical about the business’ competitive potential. The current SPAC merger indicates that at least some investors still have confidence in the company’s future.
Also known as blank-check companies, SPACs are business entities that have no operations of their own. They are created to raise funds through initial public offerings. Managers then use the funded vehicle to acquire a target business looking to go public in a reverse merger.
Only $230 million of net proceeds expected from the SPAC deal will come directly from the Property Solutions SPAC. The majority, $775 million, will come from a private placement in public equity, or PIPE, investment accompanying the merger. The PIPE’s main investors include a major Chinese automaker and other unspecified “long-only institutional shareholders.”
Faraday intends to use the capital generated from the deal to fund production of its luxury electric SUV, the FF 91. The company plans to finish building out its factory in Hanford and roll out the FF 91 within a year of the merger’s close.
For reprint and licensing requests for this article, CLICK HERE.
Stories You May Also Be Interested In
- Faraday Future Looks to Chinese Market
- Faraday Bankruptcy Plan Approved
- Faraday Faces Rockier Road
- Faraday Future Signs Lease on Central Valley Manufacturing Facility
- Gores Aims for $640 Million in New SPACs
- Local EV Companies Expect Jumpstart From Biden Administration
- Faraday Future Plans to Race FF 91 to Top of Pikes Peak
- SPAC Attack: Investment Vehicles See Surge in Popularity