EV Battery Maker Northvolt Seeks Bankruptcy Protection in US

Sweden's beleaguered electric car battery maker Northvolt on Thursday said it had applied for bankruptcy protection in the United States to enable it to restructure its debt and reorganize its business.

The company said its operations would continue as normal during the reorganization.

"By enabling the company to restructure its debt, appropriately scale the business to current customer needs and secure a sustainable foundation for continued operation, these Chapter 11 filings will help Northvolt to implement the decisions made as part of its strategic review to rescope the business and prioritise commitments to customers," the company said.

Northvolt said in September it was slashing 1,600 jobs -- a quarter of its staff -- and suspending the expansion of its site as it struggled with strained finances and a slowdown in demand.

The company has engaged in marathon negotiations in recent weeks to secure financing.

It said Thursday the bankruptcy protection filing would allow it to "access new sources of funding, including approximately $145 million in cash collateral".

In addition, "one of Northvolt's existing customers has committed to provide $100 million in new financing to support Northvolt's business operations in the form of debtor-in-possession (DIP) financing."

DIP is a specialized type of financing for businesses that are restructuring through a Chapter 11 process.

Northvolt has been seen as a cornerstone of European attempts to catch up with China and the United States in the production of battery cells, a crucial component of lower-emission cars.

Europe accounts for just 3% of global battery cell production but has set its sights on 25% of the market by the end of the decade.

The battery maker has also been plagued by production delays, which in May led car manufacturer BMW to drop an order worth $2.2 billion.