Company boss resigns
E-car supplier Northvolt applies for protection from creditors
Updated 11/23/2024Reading time: 4 min.
Battery manufacturer Northvolt is under protection from creditors in the USA. What does this mean for the planned construction of a factory in Germany?
The financially troubled Swedish battery manufacturer Northvolt has filed for special bankruptcy protection in the USA and has applied for protection from creditors. The company announced in the evening that it filed for restructuring proceedings in accordance with Chapter 11 of US bankruptcy law. In doing so, Northvolt wants to protect itself from creditors’ claims while it struggles for its future as an independent company.
In addition, company boss Peter Carlsson resigned after the application. Northvolt announced in Stockholm that he would remain with the company as a member of the supervisory board and as a leading consultant. Carlsson has led Northvolt since the company was founded in 2016 and is one of the company’s co-founders.
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An important new phase is now beginning for Northvolt and for him personally, Carlsson was quoted as saying in a company statement. The Chapter 11 filing gives the company a period of time in which it can reorganize, ramp up operations while simultaneously fulfilling obligations to customers and suppliers and ultimately position itself for the long term. Therefore, it is a good time for him to hand over the business to the next generation of management.
The company management will now consist of the CFO Pia Aaltonen-Forsell and the new board member for operational business Matthias Arleth. The two will also be supported by Scott Millar as insolvency administrator. Northvolt has already begun the search for a new company boss, the company said.
Northvolt said the bankruptcy filing would provide access to new sources of financing. 100 million US dollars (around 95 million euros) would be provided to the company by a customer company as part of a type of bridge financing. In addition, Northvolt will receive access to approximately $145 million from lenders (so-called cash collateral).
Northvolt has long been considered a great hope for the European automotive industry when it comes to battery production for electric cars. The manufacturer’s largest shareholder is the German carmaker Volkswagen. The owners also include the US investment bank Goldman Sachs and BMW.
It is not yet clear what the bankruptcy filing will mean specifically for the construction of a Northvolt gigafactory in Heide, Schleswig-Holstein. The company explained: The German subsidiary is financed independently of the parent company. “It is not part of the Chapter 11 proceedings.”
Germany boss Christofer Haux said, “Construction work is currently making progress in Dithmarschen. The location has the highest priority.” But it is already clear that the factory will start operations later than initially planned. Cell assembly is not scheduled to start until the second half of 2027, instead of the end of 2026.
At the beginning of the year, the EU Commission approved funding and guarantees worth more than 902 million euros for the billion-dollar project in Heide. The federal government and the state of Schleswig-Holstein are supporting the construction of the battery factory with around 700 million euros. There are also possible guarantees for a further 202 million euros.
An administrative agreement stipulates that state funds of 137 million euros should initially flow. But that hasn’t been the case so far. The federal government accounts for around 564 million.
The battery manufacturer pointed out that the construction in northern Germany was within the schedule set together with the federal and state governments: “No funding has been used so far, and Northvolt Germany will continue to not access any funds as long as the parent company’s restructuring continues.”
Schleswig-Holstein’s head of the state chancellery, Dirk Schrödter (CDU), sees opportunities for a restructuring plan together with the creditors. It is unfortunate that no secured financing has yet been secured for the parent company in Sweden, said Schrödter. “It is good that after the discussions of the last few weeks there is now clarity about the further procedure and the next steps.”
“It is good that the construction work in Heide is continuing and concrete statements have now been made about the schedule,” said Schrödter. The state will examine all funding law issues together with the federal government. “Questions regarding possible risks for the federal government and the state are currently being discussed and evaluated in detail with the federal government. Therefore, no statement can be made at the moment about the risk position of the federal government and the state with regard to the convertible bond, as the Chapter 11 procedure is only just beginning.” , explained Schröder.
What financing options is Northvolt exploring to secure funds for its construction projects?
S been received yet.” However, Northvolt remains optimistic about securing the necessary funds to continue with the construction and ensure its operations in the future.
While the restructuring process is expected to provide Northvolt with the necessary breathing space to stabilize its financial situation, the eventual outcome will depend on the successful negotiation of financing and the ongoing support from its stakeholders, including governmental bodies and key investors like Volkswagen and Goldman Sachs.