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Faraday Future Intelligent Electric Inc. (Nasdaq: FFAI) filed an 8-K announcing a new private financing and an SEC enforcement risk. On 14-Jul-2025 the company signed a Securities Purchase Agreement with institutional investors to issue $82 million of 5-year senior unsecured convertible notes bearing 10% interest. Notes convert at an initial price to be set in the final note, with an anti-dilution mechanism and a floor of $1.048. Investors also receive five-year warrants covering one-third of the conversion shares, exercisable at 120% of the note closing price (subject to similar price resets). Two closings are planned: an Initial Closing ~10 business days after signing and a Subsequent Closing 15 business days after SEC effectiveness and shareholder approval. The deal may be upsized by up to $20 million if additional investors join.
Conditions to close include a ≥$1.00 VWAP and ≥$4 million average daily dollar volume for the five trading days before each closing. FFIE must file a resale registration statement within 45 days of the Initial Closing. Failure or default lifts interest to 18% and triggers redemption penalties up to 25%. The company will also create an additional 3 million shares of Series B Preferred Stock to satisfy conversion-related issuances.
Regulatory overhang: the company and key executives received Wells Notices on 26-30 Jun-2025 related to alleged fraud in its 2021 PIPE and SPAC listing. Potential remedies include injunctions, civil penalties, disgorgement, and officer/director bars. Management intends to contest the findings.