Faraday Sees $850 Million Fundraise Sidestepping Founder’s Woes

(Bloomberg) -- Faraday & Future Inc.’s new chief executive aims to raise about $850 million by the first quarter of next year, an effort he doesn’t expect to be derailed by the financial problems facing the electric-vehicle startup’s founder.

The company plans to use proceeds from the upcoming funding round as a bridge to an initial public offering, Chief Executive Officer Carsten Breitfeld said in a phone interview. He took over the job weeks before Jia Yueting, Faraday’s founder, filed for bankruptcy in the U.S. after running up billions of dollars in personal debts trying to build a business empire in China.

Faraday, which is less than six months removed from securing $225 million of financing, will select a lead investor for the upcoming round by the end of this year, and both new and existing backers will participate, Breitfeld said. The company’s capital needs mean an IPO “cannot be in the too far future” while acknowledging that conditions for an offering aren’t ideal.

This year’s surge of technology and tech-related IPOs peaked with Uber Technologies Inc.’s $8.1 billion listing in May. Dismal performances by two offerings topping $1 billion in September -- SmileDirectClub Inc. and Peloton Interactive Inc. -- combined with the collapse of WeWork’s plans to go public have taken steam out of the IPO rush.

In a proposed debt-restructuring plan filed Oct. 14 in federal court in Wilmington, Delaware, Jia said he will use his ownership stake in Los Angeles-based Faraday to set up a creditor trust to repay his debts.

“He restructured his debt in a way that the company is protected,” Breitfeld said.

The creditor trust effectively becomes a shareholder of the company but won’t have voting rights, according to Breitfeld. Jia will remain chief product and user officer.

Faraday plans to build its $150,000 F-91 electric car in Hanford, California, and start delivering hand-built prototypes to U.S. customers by September 2020. The company is in talks to form joint ventures in China to scale production for global markets and avoid the impact of tariffs, Breitfeld said. He declined to identify the companies Faraday is in discussions with.

--With assistance from Michael Hytha.

To contact the reporter on this story: Ed Ludlow in San Francisco at eludlow2@bloomberg.net

To contact the editors responsible for this story: Craig Trudell at ctrudell1@bloomberg.net, Chester Dawson

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