October 7, 2018 / 2:33 PM / 2 months ago

CORRECTED-Auto firm Faraday Future wants to scrap stake sale to Evergrande Health - filing

(Corrects 6th paragraph to say Evergrande agreed to pay $700 mln in July, not paid in July. Also corrects to say payment, not payment conditions, in 7th paragraph)

HONG KONG, Oct 7 (Reuters) - Faraday Future, a start-up that is developing electric vehicles, is seeking arbitration to terminate a deal to sell a 45 percent stake to China’s Evergrande Health Industry Group Ltd, the healthcare firm said on Sunday.

Evergrande Health, a subsidiary of property developer China Evergrande Group, said in June it would buy 45 percent of Faraday Future, founded by entrepreneur Jia Yueting, as part of plans to diversify into new technology.

Faraday Future said in August that full vehicle assembly of its first high-end vehicle, the FF91, had started at its U.S. production base. It also said it had set up its operating headquarters in China.

Evergrande said it had agreed to buy Season Smart Ltd, owner of 45 percent of Faraday Future, for $860.2 million. It also said it agreed to pay Faraday Future $1.2 billion in two equal instalments, due in 2019 and 2020.

The instalments would complete Season Smart’s obligations.

However, Evergrande said in Sunday’s stock exchange it signed a supplemental agreement in July to pay $700 million ahead of schedule, subject to Faraday Futures meeting certain undisclosed payment conditions.

The Chinese firm said Jia had commenced arbitration at the Hong Kong International Arbitration Centre on Wednesday against Evergrande, saying the payment was not fulfilled.

It said Jia was seeking to deprive Evergrande, as the new owner of Season Smart, of any right as a shareholder to approve plans by Faraday Future to raise financing in future and wanted to terminate all other agreements, the filing said.

Faraday Future could not be reached for comment.

The start-up has said it aimed to reach a planned annual production capacity of 5 million vehicles after 10 years.

Evergrande said it would take all necessary steps to protect its continuing rights under the relevant agreements.

The healthcare firm’s shares resume trading on Monday. Trading has been halted since Thursday. (Reporting by Clare Jim’ Editing by Edmund Blair)

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