Last month, Northvolt suspended expansion of its plant in northern Sweden as it tried to streamline operations and cope with a cash shortfall.
The troubled supplier of batteries for electric vehicles never used guaranteed funds and this week forced the entity managing the project in Skelleftea, near the Arctic Circle, into bankruptcy. Northvolt Ett Expansion AB, a subsidiary of Northvolt, has filed for bankruptcy.
“The loans to be covered by our guarantee were intended to finance the expansion of Skelleftea, which the company has currently paused,” Karolina Ekholm, NDO’s CEO, said in an email response to Bloomberg’s questions.
The NDO guarantees were part of a $5 billion green loan package announced by Northvolt in January. This is one of the largest packages of this type, which included financing for expansion Northvolt Ett plant and refinancing of the USD 1.6 billion debt package signed in 2020.
Will the overdue tax kill Northvolt?
Northvolt is trying to find sources of financing that will strengthen liquidity and allow it to continue operating. However, another financial obstacle to further operations may be a tax bill of $28 million, which the company must pay by October 14.
According to Ekholm, lenders could provide loans for other purposes, but the NDO guarantee is project-specific, the Skelleftea expansion, and cannot be used to finance existing operations without the bank’s consent.
It will be difficult to obtain further loan guarantees
Ekholm’s statement shows that NDO is open to new applications as long as they meet Swedish regulations on loan guarantees for green investments. However, these regulations may pose an obstacle for Northvolt because prohibit guarantees for companies defined by the European Union as “firms in difficulty” – she noticedEkholm.
