(Bloomberg) — Goldman Sachs Group Inc.’s investment arm, the second-largest shareholder in Northvolt AB, is considering joining other investors in an effort to rescue the cash-strapped battery maker, according to people familiar with the matter.
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Goldman Sachs Asset Management is actively involved in trying to find a solution to Northvolt’s liquidity crisis, the people said, asking not to be identified because the fundraising talks are confidential. They characterized the discussions as constructive, while cautioning that the situation remains fluid, and the firm’s participation would depend on support from other investors.
Northvolt has been working for weeks to secure a cash infusion that would pull the struggling electric-vehicle supplier through a liquidity crisis disclosed last month. The company has laid off staff and scaled back projects as it seeks to cut costs, raise capital and increase battery-cell production at the Swedish manufacturer’s main plant near the Arctic Circle.
A spokesperson for Goldman Sachs Asset Management declined to comment.
A Northvolt spokesperson declined to comment. On Tuesday, the company said it was making progress on the funding package and continues to “work intensely” on the proposal.
Goldman’s involvement would boost Northvolt’s fundraising effort and encourage others to participate. The scramble to save the company is complicated by the mix of creditors, equity investors and government players who backed its mission to create an independent European supply chain for EVs. As they consider next steps, each has considerations to weigh.
Volkswagen’s Role
Northvolt is targeting around €200 million ($218 million) to address its short-term needs, with about €150 million of that committed under verbal agreements, Bloomberg News has reported.
Top shareholder Volkswagen AG has suggested it’s willing to help Northvolt ramp up production of battery cells, though it hasn’t provided specifics. The German carmaker is under pressure to conserve resources after disclosing plans to close factories at home amid a sales slump.
Nonetheless, VW’s Swedish truckmaking unit Scania uses Northvolt batteries and could provide financial aid through battery cell pre-orders, newspaper Dagens Industri reported this month.
Northvolt Chief Executive Officer Peter Carlsson and co-founder Harald Mix have pledged to provide fresh capital. In a DI op-ed on Wednesday, Mix said he’s invested more than 1.5 billion Swedish kronor ($144 million), on par with Swedish institutions.
The company has received about $10 billion in debt and equity funding since its founding in 2017. However, its strategy to grow aggressively in a range of battery technologies threw up numerous operational hurdles.
Rapid Expansion
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.
As it sought to gear up production at its main plant in Skelleftea, Northvolt encountered quality issues, leading to a high number of faulty cells. In June, BMW AG canceled a €2 billion order due to quality problems in a prelude to Northvolt’s current liquidity crisis.
Officials in Sweden and Germany, where Northvolt is building a factory, have emphasized the importance of saving the company, though they haven’t commited to any added funding.
Germany’s economy minister, Robert Habeck, said last week that Northvolt’s problems are “technically solvable.”
Swedish Deputy Prime Minister Ebba Busch offered similar encouragement. “There is still hope for Northvolt, and we hope this will succeed,” she said.
–With assistance from Kamil Kowalcze and Niclas Rolander.
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Source: finance.yahoo.com
