Sweden’s electric car maker Polestar has entered into a loan agreement of up to $600 million with its majority owner, China’s Geely Holding, as the company seeks to ease pressure on its liquidity amid a broader slowdown in global electric vehicle demand.
The shareholder loan will be provided through Geely’s Swedish unit and is structured as a subordinated loan, meaning it does not count towards Polestar’s existing debt covenants, which stand at $5.5 billion, according to the company.
Polestar said the final tranche of $300 million would be subject to the lender’s consent and based on the company’s future liquidity needs.
Like several other electric vehicle start-ups, Polestar has burned through significant amounts of cash while attempting to scale production and reach profitability. The company has repeatedly renegotiated terms with lenders in recent years to remain in compliance with its debt agreements.
In June, Polestar also secured a $200 million equity investment from PSD Investment, a company controlled by Geely Holding founder Li Shufu.
Geely Holding, one of China’s largest private automotive groups, is the majority owner of Polestar and also owns Volvo Cars.
Source: Reuters
