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Northvolt calls its liquidity situation "dire"

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Operations to continue during restructuring, expected

completion

by Q1 2025

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Scania lends $100 million for bankruptcy process

(Recasts lead with context; adds details on company finances in

paragraphs 2-3, comments from Northvolt, shareholder and analyst

in paragraphs 8-11, comment from Swedish government in last

paragraph)

By Dietrich Knauth, Marie Mannes and Terje Solsvik

Nov 21 (Reuters) - Northvolt, the Swedish maker of

battery cells for electric vehicles, said on Thursday it has

filed for Chapter 11 bankruptcy protection in the U.S., dealing

a blow to Europe's hopes that its most developed battery player

would reduce Western car makers' reliance on Chinese rivals.

Northvolt said it has only enough cash to support its

operations for about a week and said it has secured $100 million

in new financing for the bankruptcy process. It said operations

will continue as normal during the bankruptcy.

"Northvolt's liquidity picture has become dire," the company

said in its Chapter 11 petition, filed in U.S. Bankruptcy Court

in Houston. The company, which has operations in California, has

about $30 million of cash, which can only support its operations

for about a week and $5.8 billion in debts.

Northvolt said it expects to complete the restructuring

by the first quarter of 2025.

Northvolt went in a matter of months from being Europe's

best shot at a home-grown electric-vehicle battery champion to

racing to stay afloat by slimming down, hobbled by production

problems, the lossof a major customer and a lack of funding.

Europe has been hoping that Northvolt would reduce

Western car makers' reliance on Chinese rivals such as CATL

and BYD.

Northvolt said the $100 million in a new loan is part of

$245 million in financing support for the bankruptcy. Swedish

truck maker Scania, a shareholder and its biggest customer, said

on Thursday that it was loaning $100 million to Northvolt to

support the manufacturing of electric vehicle battery cells in

Skellefteå, northern Sweden.

"This decisive step will allow Northvolt to continue its

mission to establish a homegrown, European industrial base for

battery production," Tom Johnstone, interim chairman of

Northvolt's board, said in a statement, noting the support

Northvolt has received from existing lenders and customers.

As part of the restructuring, Northvolt will evaluate

proposals for new money investment from strategic and financial

investors, as well as existing lenders, shareholders and

customers, he said.

Investment group Vargas, a co-founder of Northvolt and

one of its largest shareholders, said the bankruptcy would allow

the company to address its financial challenges and maintain its

competitive edge in producing high-performance battery cells.

Handelsbanken analyst Hampus Engellau said the

bankruptcy filing would give the company some short-term

breathing space. Even so, he said, "This tells us that they

haven't found investors and raised the capital needed to

restructure their business."

Northvolt had been discussing the possibility of filing for

Chapter 11 bankruptcy protection in the United States as one of

several options for survival, two sources familiar with the

matter told Reuters last week.

STIFF COMPETITION

With Volkswagen among its owners, Northvolt has

led a wave of European startups investing tens of billions of

dollars in battery production to serve the continent's

automakers as they switch from internal combustion engines to

electric vehicles.

But growth in EV demand is moving at a slower pace than some

in the industry had projected, and competition remains stiff

from China, which controls 85% of global battery cell

production, International Energy Agency data shows.

On Monday, Reuters reported that Northvolt has missed some

in-house targets and curtailed production at its battery cells

plant in northern Sweden, underscoring the challenge of ramping

up output.

In October, Northvolt struck a deal that gave access to a

small amount of money while talks on a bigger financing package

continued, business daily DI reported.

Those talks had become more difficult in recent weeks, one

of the sources familiar with the Chapter 11 plan said.

In recent years several Swedish companies have opted for

filing for Chapter 11 protection such as Scandinavian airline

SAS and debt collector Intrum, a process that allows management

to retain control over the company and run its operations.

Deputy Prime Minister Ebba Busch said on X that the

government continues to support the EV battery industry and

hopes that the restructuring would help turn Northvolt's

fortunes around. Busch told Reuters on Tuesday the Swedish

government did not plan to take a stake in Northvolt.