Quebec Economy Minister Christine Frechette is reassuring the province following the announcement that Swedish battery maker Northvolt has filed for bankruptcy protection.
Fréchette said at a press conference Thursday that the filing will not affect the company’s major projects in Quebec’s Montérégie region. The region plans to build a massive $7 billion electric vehicle battery factory.
“Today’s news has nothing to do with the Quebec project,” she said. “It is the Swedish parent company that is under protection.”
Operations at the McMasterville plant continue as planned and Northvolt’s financial position is secure for at least 18 months, he said. Northvolt has already invested more than $100 million into the site.
Fréchette said Quebec’s biggest risk was the $170 million it invested in the parent company, but said the bankruptcy process would allow the Swedish parent company to rebuild and stabilize its operations, leaving Northvolt’s future in jeopardy. Showed confidence.
Pascal Paradis, a spokesman for the Parti Québécois on energy issues, said Quebec was taking a big gamble with Quebecers’ money by investing in Northvolt, adding that if the parent company’s restructuring fails, Quebec He added that it would affect his future in the state.
But one Quebec expert echoes Frechette’s optimism.
“One might expect Northvolt to be more nimble and nimble and have a better chance of success,” said Yann Simon, a professor of strategy at Laval University’s School of Management.
He said the bankruptcy process would give the company some breathing room and allow it to make its business more sustainable in the long term. The company is still a young company in a dynamic industry facing strong competitors, and there are bound to be hiccups along the way, he said.
Although bankruptcy could affect the scale of business in Quebec, “there is hope for batteries,” as demand for batteries will only grow, he said.
Northvolt said in a statement Thursday that filing for bankruptcy was a voluntary decision as part of its efforts to restructure its debt and adapt its operations to meet the needs of its customers.
The company also assured that this decision will not affect its operations around the world, including its Northvolt Six plant in Quebec.
“Northvolt Six is an integral part of the company’s future, and we remain fully committed to making it a reality,” Paolo Cerruti, CEO of Northvolt North America, said in a statement. said. “We look forward to continuing to work with all stakeholders to make this project a success.”
The company also assured that it will continue to deliver to customers, meet obligations to essential suppliers and pay employees’ wages during the restructuring period.
“Northvolt, like other international companies that have used the Chapter 11 process to restructure their financial obligations, will continue to operate as usual during the restructuring,” the company said in a statement.
Management said the Chapter 11 filing will give the company access to $145 million in cash collateral for restructuring purposes. The battery maker also secured an additional $100 million from investors.
On Wednesday, Radio-Canada reported that there had been several days of internal discussions at Northvolt about applying for Chapter 11 bankruptcy protection to protect the financially struggling company.
Faced with rapid growth and a lack of liquidity, Northvolt announced in September a strategic review plan that included canceling a factory project in Sweden, rationalizing operations in Poland and California, and cutting 1,600 jobs in Sweden. did.
The European battery giant cited slower-than-expected growth in the automotive battery market and strong competition, particularly from Asia.
Northvolt’s major shareholders are Volkswagen (21% ownership), Goldman Sachs (19%), and Vargas Holding (7%).
of Quebec warehouse and locationThe state’s public pension fund administrator also invested $200 million in the company.
