Britishvolt, the company behind the proposed new battery factory in Cambois near Blyth has finally gone into administration.
Reports of financial difficulties surfaced last summer and before Christmas the Company had been given about five weeks of funding from Glencore, one of its main backers, to find a route out of its financial crisis and avoid administration.
A proposal to buy and then invest in the company by an Indonesian UK listed company Dealab, and a rival bid by a group of existing shareholders were discussed by the Board on Friday 13 January, but apparently no solution was found. On Tuesday 17 January a full meeting of employees was advised that Britishvolt would fall into administration. Most of the estimated 230 employees were made redundant with immediate effect.
Ernst & Young Global Limited, the appointed administrator, noted that they would now explore options for a sale of the business and the assets.
Why did Britishvolt fail?
The promise of Britishvolt was always perhaps too good to be true. Started by a Swedish investor who had little knowledge of the battery industry and little finance, it was targeted at the clear need to develop a source of batteries for UK car manufacturers, and the Government’s promise of financial assistance. Although the founder resigned a year later, after an old fraud conviction in Sweden was exposed, the company gained support from Boris Johnson and the promise of future government finance. Respected private investors joined the project and staff experienced in the industry also came on board. Shortly after Boris Johnson praised the project, Chief Strategy Officer Isobel Sheldon was awarded an OBE and City Grandees Sir Michael Synder and Lord Chadlington joined the Board.
The problem was ultimately likely to be finance. The promised government cash was dependent on private investment getting the project to various milestones of development. The Britishvolt technology was to be designed from scratch and, possibly as a result, no UK car manufacturer had yet committed to be customers. Nissan made its own independent arrangements with a Chinese company already heavily invested in battery manufacture.
The private finance has not materialised, Britishvolt has gone into administration.
Less that a year ago the selling price of new shares suggested a company valuation of around £2 billion. That valuation may now have virtually disappeared and the more than 300 listed shareholders (as of May 2022) may have lost most of their investment. At £2 billion, the biggest shareholder, ex-CEO Orral Najari had a holding of about £700 million. Sir Michael Synder and Lord Chadlington held shares worth about £3 million and £16 million respectively.
The failure of Britishvolt must be particularly heart-breaking for Isobel Sheldon, a well-respected industry veteran of many years of experience, as it is the second time her venture into electric vehicle power supply has foundered and gone into administration. This time, at the valuation of last spring, her holding was estimated to be worth around £30 million. The Guardian notes that some of the investors think Britishvolt was always “something of a lottery ticket”, and while some of the bigger investors have lost millions of pounds, it’s not enough to make a material impact on their balance sheets.
This is probably not the case for many of the smaller investors and those who may have taken an equity stake in the company as remuneration.