Kirkland & Ellis and A&O Shearman are advising Swedish battery maker Northvolt because it enters Chapter 11 restructuring proceedings, with courtroom filings stating {that a} whole of $5.84bn in whole funded debt obligations has left the corporate in a ‘dire’ liquidity place.
Final Thursday (21 November), Northvolt filed for Chapter 11 safety in a Texas courtroom to ‘restructure its debt, appropriately scale the enterprise to present buyer wants, and safe a sustainable basis for continued operation’, in accordance with a press launch.
LB understands that the multinational Kirkland workforce consists of companions Kon Asimacopoulos, Sean Lacey, Charlotte Wheeler, and Dan Stathis on the deal in London, together with Edward Sassower, Christopher Greco, and Ciara Foster in New York, and John Luze in Chicago.
The London-based A&O Shearman workforce consists of restructuring associate Katrina Buckley and undertaking finance companions Rachel O’Reilly and Michael Diosi, in accordance with individuals with information of the matter. In January, O’Reilly and Diosi, whereas at legacy A&O, suggested Northvolt on the $5bn undertaking financing of its first gigafactory in Sweden, Northvolt Ett.
That is understood to mark Kirkland’s first work for Northvolt. The agency has not too long ago labored on main Chapter 11 filings together with the chapter of Intrum, one other Swedish firm, earlier this month, and suggested Scandinavian airline SAS in its Chapter 11 proceedings, which ended when the corporate exited chapter in August 2024.
‘This seems to be the third massive Swedish scenario not too long ago that has first filed for US Chapter 11’, commented a restructuring associate at a number one agency.
‘It clearly calls into query the effectiveness of the obtainable Swedish processes however highlights but once more the energy of Chapter 11 as a mechanism to usher in protected DIP funding and restructure a gaggle in opposition to the backdrop of a keep which is, for essentially the most half, revered globally’, the associate continued.
Northvolt stated in an announcement that the restructuring will permit it to safe roughly $245m in new funding, together with $100m in debtor-in-possession (DIP) financing from its current buyer, Swedish truck producer Scania, together with $145m in money collateral.
Northvolt is suggested by Teneo on restructuring and communications, with London-based senior managing director Scott Millar main. He acknowledged in courtroom filings that ‘Northvolt’s liquidity place has grow to be dire’, and defined that as of petition date the agency had just one week of money left – round $30m.
His submitting additionally famous that the European electrical automobile market declined in 2023, primarily resulting from financial uncertainties and operational challenges affecting battery producers worldwide. On the identical time, established Asian producers continued to develop, creating strain on newer battery makers like Northvolt, which recorded a web lack of $1.6bn in 2023.
The Chapter 11 submitting follows unsuccessful efforts to safe liquidity over the previous few months, together with a $154m bridge facility in August. In September, Northvolt explored its choices and acquired $50m from its shareholders. However monetary circumstances continued to deteriorate till the corporate’s place grew to become unsustainable.
This follows a number of rounds of fundraising from January 2017 to January 2024, throughout which Northvolt raised over $8bn, in accordance with filings. The investments included help from the Swedish and different European governments, in addition to from Goldman Sachs and Volkswagen Group in 2019.
Northvolt can be suggested on the proceedings by Haynes and Boones as native Texas counsel and Mannheimer Swartling as native Swedish counsel. The restructuring is because of full by the primary quarter of 2025.
elisha.juttla@legalease.co.uk
