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EV Startup Faraday Said in SPAC Merger Talks to Go Public

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·3 min read
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(Bloomberg) -- Faraday & Future Inc., an electric-vehicle startup, is in talks to go public through a merger with Property Solutions Acquisition Corp., a blank-check firm, according to people with knowledge with the matter.

The special purpose acquisition company is seeking to raise more than $400 million in equity to support the transaction, which is slated to value the combined entity at around $3 billion, the people said. As with all deals that haven’t been finalized, it’s possible that terms change or talks fall apart.

A Faraday spokesman didn’t respond to multiple requests for comment. A Property Solutions representative declined to comment. The firm’s shares surged 37% to $13.84 as of 5:35 a.m. Monday in New York, before the start of regular trading.

Los Angeles-based Faraday, led by Chief Executive Officer Carsten Breitfeld, was founded by Jia Yueting, an entrepreneur who in October 2019 filed for bankruptcy in the U.S. after running up billions of dollars in personal debt. His efforts to build a business empire in China spanning interests from streaming to TVs saw him borrowing against pledged shares, leaving him on the hook for $2.3 billion in claims, according to the filing.

Jia emerged from bankruptcy after setting up a creditors trust and transferring all of his shares in Faraday to the trust, he said in a July statement posted to the EV company’s website. He said as much as 10% of the trust will go to compensating shareholders in Leshi Internet & Technology Corp., a now de-listed unit of his conglomerate, and that he no longer holds any equity in Faraday but remains an employee. Approval of the plan cleared the way for the company to work toward its equity financing targets, the company said.

Faraday this month appointed Zvi Glasman, the former chief financial officer of Fox Factory Holdings, as its CFO. It has said its flagship vehicle, the FF 91, will be available for sale about a year after the close of a successful round of funding.

The ranks of automakers seeking to compete with Tesla Inc. in electric vehicles are heavily populated by Chinese startups. Investors were gripped by a mania for all things related to EVs in 2020, boosting Chinese car company Nio Inc.’s valuation above those of General Motors Co. and Ford Motor Co. Xpeng Inc. raised $2.2 billion from a follow-on share sale in December just a few months after its $1.7 billion IPO, and internet giant Baidu Inc. also is getting involved. It plans to team up with Geely Automobile Holdings Inc. to make electric vehicles for the Chinese market.

Read More: Tesla’s Dominant Position in China Could Be Threatened Next Year

Property Solutions, led by Chairman and co-CEO Jordan Vogel, raised $230 million in a July 2020 IPO. The company, which has the ability to pursue a combination in any industry, said at inception that it intended to target firms that service the real estate industry, including property technology.

Several EV companies including Nikola Corp. and Fisker Inc. have gone public since last year by merging with blank-check firms.

(Updates with Property Solutions shares trading in the third paragraph.)

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