By Marie Mannes
STOCKHOLM (Reuters) -Battery cell maker Northvolt has filed for bankruptcy in Sweden, the company said on Wednesday, marking one of the country’s largest corporate failures and effectively ending Europe’s best hope of developing a rival to challenge China.
“This was a decision we did not take lightly” and it was the only “realistic path forward,” Northvolt Chairman Tom Johnstone told a press conference, saying every avenue had been pursued to avoid bankruptcy for the company, which puts 5,000 jobs at risk.
The EV battery maker sought U.S.
Chapter 11 bankruptcy protection in November as its cash pile dwindled and it scrambled to secure funds to fix problems boosting output at its flagship plant in northern Sweden.
Its debt stood just over $8 billion across the Northvolt entities entering bankruptcy, U.S.
chapter 11 documents showed.
The bankruptcy is one of the biggest in Swedish corporate history, and the most high-profile since carmaker Saab Automobile more than a decade ago. It is a huge blow to Sweden’s north, particularly the small town of Skelleftea, home to the Northvolt Ett factory.
Europe’s auto sector had hoped Northvolt would reduce Western carmakers’ reliance on Chinese rivals such as battery maker CATL and EV and battery maker BYD.
‘A LOT GONE WRONG’
“It’s obvious that a lot has gone wrong, and the price is now being paid by our members,” Marie Nilsson, leader of the IF Metall union said in a statement.
The Swedish company has received more than $10 billion in equity, debt and public financing since its 2016 inception, and its biggest owners include Volkswagen with a 21% stake, and Goldman Sachs, with 19%.
Northvolt’s operations in North America and Germany were not filing for bankruptcy in their jurisdictions, the company said, and neither was its Polish unit, an internal document showed.
Canada’s Industry Minister Francois-Philippe Champagne said the Canadian government was in talks to help find a buyer for Northvolt’s plant in Quebec.
German Economy Minister Robert Habeck said he hoped Northvolt might still be rescued by an investor who could secure the future of its planned German plant.
The bankruptcy will impact Northvolt’s flagship plant in Skelleftea, where a green industry boom had created thousands of jobs, many of which were now in jeopardy.
“It is important to emphasize that what is now affecting Skelleftea in the short term will affect Sweden and Europe much more severely,” Skelleftea Mayor Lorents Burman said.
Northvolt last year clinched a $5 billion green loan deal to expand a plant, but funding was cancelled as its problems mounted, including raising output at its Skelleftea factory.
Sweden’s Deputy Prime Minister Ebba Busch said the government stood ready to support Northvolt employees, and she hoped “the business will be able to find a new long-term owner”.
Porsche, which had supply contracts with Northvolt, said it had begun searching for alternatives after news of the bankruptcy filing.
Volkswagen said it remained in contact with Northvolt but declined to comment further on the bankruptcy.
Several shareholders have in recent months written down the value of their Northvolt stakes to zero, while long-time partner Scania said it had lined up a new supply of battery cells.
German carmaker BMW cancelled a $2 billion order in June after Northvolt failed to deliver on a long-term contract.
LOSS FOR SWEDISH INDUSTRY
Co-founder Peter Carlsson, who stepped down as Northvolt CEO shortly after the Chapter 11 filing in November, has said the company needed up to $1.2 billion to restore its business.
“What ultimately forced the board to take this decision last night was that it did not see a solution to the short term liquidity need,” Carlsson told reporters on Wednesday.
Creditors include both private and public investors.
The bankruptcy was “a loss for Sweden’s industry and social economy, and above all for Skelleftea, Northvolt and its employees,” said Jenny Askfelt Ruud, who chairs 4 to 1 Investments which has invested 5.8 billion Swedish crowns ($578 million) in Northvolt shares and convertibles.
A court-appointed trustee will oversee the bankruptcy process, which will include the sale of Northvolt’s assets and settling its outstanding obligations as far as possible.
($1 = 10.0405 Swedish crowns)
(Reporting by Marie Mannes; additional reporting by Anna Ringstrom, Christian Kraemer, Johan Ahlander, Alessandro Parodi, Victoria Waldersee, Johan Ahlander and Ismail Shakil; writing by Niklas Pollard and Terje Solsvik; editing by Tomasz Janowski, Elaine Hardcastle and Bernadette Baum)
