Northvolt owners vote in favour of restructuring

The shareholders of troubled battery manufacturer Northvolt have voted against liquidating the company and in favour of continuing the restructuring process under Chapter 11 of the US Bankruptcy Code. Shareholders such as BMW, VW and Goldman Sachs are thus hoping for Northvolt's continued existence.

The vote at the shareholders’ meeting in Stockholm on Wednesday is seen as an important decision for Northvolt’s future. If the shareholders had voted in favour of liquidation, they might have been able to recover some of their investment from the sale of assets and intellectual property. With the owners’ vote, it is clear that the restructuring, monitored by an American court due to the Chapter 11 insolvency filing under US law, will continue.

“This is a positive outcome that demonstrates the support of our shareholders as we seek to realise our ambition and maximise our value,” the company said in an emailed statement after the meeting. “Northvolt continues to make progress in the restructuring process while ramping production and executing on its transformation.”

Reuters reports that Swedish companies are legally obliged “to seek a mandate from shareholders to continue operations if their equity value is estimated to have dropped below half that of their registered share capital.” Northvolt AB is registered in Sweden, even though the insolvency proceedings are being conducted under US law.

Several factors coincided at Northvolt: The ramp-up of production in Skelleftea was behind schedule for a long time, and the poorly utilised production has cost money that is not being generated as planned due to the delivery volumes. At the same time, the situation of Northvolt’s major shareholders deteriorated, which is why the necessary financing could not be realised. As a result, the Swedish company filed for Chapter 11 insolvency in November and CEO Peter Carlsson resigned.

Since then, the company has focused on scaling up production in Skelleftea. Some projects have since been scrapped or sold off. When filing for insolvency in November, Northvolt had 6,600 employees in seven countries worldwide. A new battery factory was to be built in Heide, Germany, with a lot of state subsidies, but its future is uncertain due to the financial bottlenecks. As recently as November, Northvolt Germany emphasised its financial independence from its Swedish parent company as an independent GmbH. However, there is likely to be a delay in the German factory.

reuters.com