Shares of Faraday Future (NASDAQ:FFIE) are up by more than 10% after the company announced it had secured up to $100 million in funding and resolved a governance dispute with FF Top Holding, a large shareholder of FFIE stock. The firm controls about 36% of the voting power of the former special purpose acquisition company (SPAC).
FF had previously sued Faraday in Delaware Chancery Court, claiming the board had “driven the company into the ground.” As part of the litigation, FF requested the removal of executive chair Susan Swenson and another director. This came as speculation arose that “certain directors” were conspiring to pursue a bankruptcy in order to fill their own pockets.
Now, it appears as if the two parties have come to a resolution. Swenson will step down as executive chair when Faraday receives $13.5 million in net financing proceeds. As of Sept. 23, the company had received $7.5 million of those proceeds.
Both Swenson and Brian Krolicki will step down from the board when Faraday receives $85 million in incremental financing commitments and $35 million in net proceeds. As of Sept. 23, the company had $25 million to satisfy those commitments. FF will also withdraw its lawsuit by Sept. 27.
Why Is FFIE Stock Racing Higher Today?
As part of the resolution, Faraday will increase the number of board members from nine to 10. Adam He will immediately fill one of those positions and also join the audit committee. He is an “experienced CFO” and holds Master of Science degrees in both taxation and accounting.
At Faraday’s 2022 annual meeting, several new nominees will be eligible for board nomination, including CEO Carsten Breitfeld, three individuals selected by FF and an additional three individuals handpicked by a selection committee.
Separately, Faraday will receive up to $60 million in funding from equity fund Senyun and up to $40 million from ATW. The funding will go towards the production and delivery of the company’s long-delayed electric FF 91 electric SUV. In July, the company stated it needed $325 million for production and company operation efforts through the end of 2022.
In regards to the director conspiracy theories, Faraday announced it had hired a law firm to investigate the allegations, which the latter stated were “without merit.”
On the date of publication, Eddie Pan did not hold (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.