Faraday Future’s financial strength in question for Nevada official

By Megan Messerly

Wednesday, May 11, 2016 | 1:20 p.m.

Nevada Treasurer Dan Schwartz continues to raise concerns about electric car company Faraday Future’s financial viability after LeEco, one of Faraday Future’s investors, did not resume trading shares last week.

LeEco, a Chinese tech company which suspended trading in December, has set and missed several deadlines for when it would resume trading, including mostly recently on May 7, according to Business Insider. Schwartz said today that he is concerned over reports that LeEco’s CEO Jia Yueting, one of the investors in Faraday, has pledged a large portion of his LeEco shares to back his personal lines of credit.

LeEco is also Faraday Future’s strategic partner.

Schwartz said in a statement that his office has not received documentation indicating the Faraday project remains on schedule for the bond’s scheduled issue date in September. The treasurer’s office is responsible for issuing the general obligation bonds needed to finance infrastructure improvements at Apex Industrial Park in North Las Vegas, where Faraday will build its first manufacturing plant.

“Until Faraday Future publicly discloses additional details concerning the plant’s financing and production dates, we remain concerned about the viability of this undertaking,” Schwartz said. “Our office continues to monitor this project on multiple fronts and will provide further updates as appropriate.”

Trading of LeEco shares has remained suspended while the company acquires an ownership stake in Le Vision Pictures, its film business, according to Business Insider. The South China Morning Post reported Monday that LeEco will issue Le Vision shareholders LeEco stock at a 30 percent discount from its closing price in December. Both of those reports concern Schwartz.

However, Faraday has previously said its funding “remains unchanged” by the suspension of trading of LeEco shares, as LeEco is a separate company. Faraday representatives could not be immediately reached for further comment Wednesday.

Other state officials have long insisted that adequate provisions were built into that December legislation to safeguard the state should Faraday run into financial trouble.

Nevada state law, created by the Legislature during a special session in December, requires Faraday to secure the state’s investments in infrastructure projects at Apex, which it has promised to do so in the form of a $75 million performance bond. The bond will be released back to the company only when it has built 1.5 million square feet on the site and generated revenue from electric cars built at its facility.