Northvolt Close to $300M Deal to Address Cash Flow Issues
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Northvolt AB is closing in on a $300 million rescue package that includes debt and equity, according to people familiar with the matter, buying time for the cash-strapped Swedish battery maker to stabilize production and line up longer-term financing.
A combination of shareholders, lenders and customers are participating in the bridge funding, and the instruments vary among these groups, the people said, asking not to be named commenting on private negotiations. Discussions are in the final stages, though there remains some risk they can still fall apart, they said.
The stopgap funding would buy time for the electric-vehicle supplier to secure more-permanent funding that would put it on a path toward self-sustainability. The company has sealed tens of billions of dollars in battery orders but has struggled to deliver finished products at acceptable quality and rates.
Northvolt declined to comment.
The people didn’t provide breakdowns between debt, equity, or any other forms of aid. Dagens Industri reported earlier that Northvolt was near a financing totaling between 1 billion and 1.5 billion Swedish kronor ($95-143 million).
Northvolt has been targeting about €200 million, Bloomberg News and others have reported. Goldman Sachs Asset Management, its second-largest shareholder, was considering joining the rescue, Bloomberg News reported this week.
Top shareholder Volkswagen AG has said it will help Northvolt scale up battery-cell production but provided little detail. Its Scania truckmaking unit, which relies on Northvolt cells, is a customer and could provide financial aid, people familiar with the matter have said.
“We are in close dialog but we cannot comment beyond that,” a Scania representative said.
Harald Mix, Northvolt’s founder, has pledged to kick in more cash. The investor, who leads Vargas Holding AB, wrote a newspaper op-ed this week, supporting the company’s bid to continue despite “major challenges.”
Another shareholder, EIT InnoEnergy, will offer “significant” financial support, according to a local report.
Funding, Competition
Northvolt has received about $10 billion in debt and equity funding since its founding in 2017. But it’s up against established Chinese competitors like Contemporary Amperex Technology Co. and BYD Co. that have had years to master the challenge of making battery cells and have much lower costs.
The Swedish company’s strategy to grow aggressively in a range of battery technologies added to its numerous operational hurdles. The plans encompassed not just a rapid scale-up of complex cell manufacturing, but the production of components such as cathode materials and the construction of several new factories.
In recent weeks, Northvolt has cut jobs and pared back its ambitions to focus raising cash and increasing output at the main plant in Skelleftea.
An expansion there has been shelved, and the unit overseeing the project was placed into bankruptcy. The company has said it will reduce its global workforce by 20%, including 1,600 positions in Sweden.
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