(Bloomberg) -- Lenders to Northvolt AB have selected investment bank PJT Partners to help advise on options as a cash crunch deepens at the troubled maker of electric-car batteries, according to people familiar with the matter.
While there are no restructuring talks under way, PJT will work alongside law firm Milbank LLP, which was already a lender adviser, the people said, asking not to be named discussing private information. Creditors are preparing for a range of scenarios at the Swedish manufacturer, some of the people said.
Northvolt has fallen into crisis in recent months, reversing a rapid rise as Europe’s answer to the dominant Chinese car-battery industry. Its biggest investors are Volkswagen AG and Goldman Sachs Group Inc., and the company has expanded beyond Sweden into Germany and Canada.
But Northvolt has been beset by operational setbacks in recent months as it seeks to ramp up its battery production at its main site in Skelleftea, Sweden. The factory delivered its first batteries in May 2022, but scaling output since then has been far from smooth. BMW AG backed out of a €2 billion ($2.2 billion) order in June, while Volkswagen’s Scania unit complained of slow deliveries earlier this year.
This month, the company announced it was cutting jobs and pausing operations at its Northvolt Ett Upstream 1 cathode material production facility as part of a strategic review aimed at halting its financial crisis. Local business daily Dagens Industri reported this month that the company was looking to raise 7.5 billion kronor ($737 million) to make September’s payroll.
“We are having to take some tough actions for the purpose of securing the foundations of Northvolt’s operations to improve our financial stability and strengthen our operational performance,” Chief Executive Officer Peter Carlsson said then.
Northvolt is working on its business plan and is being advised by its longtime investment bank, Rothschild & Co. and law firm A&O Shearman, as well as an unnamed consulting firm, some of the people said.
A Northvolt representative didn’t immediately respond to requests for comment.
In January, the company received $5 billion in non-recourse project financing to expand the gigafactory in Skelleftea, which would increase its annual output capacity for battery production to as much as 60 gigawatts per hour.
At the time, the deal was the largest green loan raised in Europe, aimed at creating the first fully integrated, circular battery production facility outside Asia, according to a statement then from European Investment Bank.
The EIB alone contributed more than $1 billion, signaling the European Union’s interest for developing the technology in the region. Yet EV sales in Europe have been slumping, adding to the challenges facing Northvolt.
It is unclear whether the battery maker’s major shareholders, including VW and Goldman Sachs, intend to inject fresh capital into the struggling company. Invoices worth 121 million kronor have been sent to Sweden’s Enforecement Authority over unpaid bills at Northvolt this year, state broadcaster SVT reported this month.
“They are simply in a liquidity crisis,” said Magnus Henrekson, a vocal critic of the project who works for the privately funded Research Institute of Industrial Economics in Stockholm.
International and domestic investment banks also participated in the January loan. They include Banco Santander SA, BNP Paribas SA, Deutsche Bank AG, Intesa Sanpaolo SpA and JPMorgan Chase & Co., as well as Sweden’s Swedbank AB, German development bank KfW Ipex and energy-infrastructure lender Siemens Bank.
The EIB declined to comment, as did representatives for for PJT, Rothschild, BNP, Deutsche Bank, JPMorgan, Intesa, Swedbank, Santander, KfW, A&O Shaerman and Siemens Bank.
Milbank didn’t immediately respond to requests for comment.
--With assistance from Charles Daly and Rafaela Lindeberg.
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