Sweden-based Polestar Automotive announced on December 16 that it has signed a loan agreement worth up to $600 million with its controlling shareholder, China's Geely Holding Group. The move comes as the global electric vehicle market faces sluggish demand, leaving the company grappling with financial constraints.
A Polestar spokesperson stated that the shareholder loan will be disbursed through Geely's Swedish subsidiary and classified as "subordinated debt," meaning it will not count toward Polestar's $5.5 billion debt covenant limit. The spokesperson also revealed that the company is actively seeking additional equity financing.
In a statement, Polestar indicated that the final $300 million tranche of the loan will be disbursed based on the company's future liquidity needs, subject to lender approval.
Like many emerging EV manufacturers, Polestar has spent heavily to expand operations, facing persistent challenges in liquidity management and debt control. The company has long been at risk of breaching certain debt covenants, prompting repeated negotiations with lenders to amend terms and reach agreements with creditors to adjust covenant requirements, ensuring compliance throughout the year.
In June, Polestar raised $200 million in equity financing from major shareholder PSD Investment, an entity controlled by Geely Holding founder Li Shufu. PSD Investment currently holds a 44% stake in Polestar, which will rise to 66% upon completion of the latest transaction.
Geely Holding also owns other automotive brands, including Volvo Cars and Lotus.
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