Northvolt: 'We're not afraid of Goldman Sachs,' says Legault

The entrance to the Northvolt site in Saint-Basile-le-Grand, Thursday, May 16, 2024. (LA PRESSE CANADIENNE/Christinne Muschi)

Engaged in negotiations to save Northvolt's battery plant project, the Quebec government is insisting it will not add any more money to the project or give up its guarantees on sums invested in the troubled Swedish company.

This is the government's response to a Radio-Canada report suggesting that Quebec might be prepared to lose some of the hundreds of millions of dollars invested in subsidiaries to save the project's parent company.

One of the company's main creditors, investment bank Goldman Sachs, is demanding access to the assets of foreign subsidiaries, including those in Quebec, as collateral as a condition for reinvesting funds and saving the company.

A source close to the matter confirmed the information to La Presse Canadienne on Tuesday morning, suggesting that Economy Minister Christine Fréchette would be in favour.

A government spokesperson later questioned where that information came from.

"Quebec taxpayers are being asked to guarantee the investment of a major New York bank in a start-up in Sweden," denounced Quebec Solidaire parliamentary leader Gabriel Nadeau-Dubois during Question Period.

However, Premier François Legault argues he won't back down, sending a message to the New York bank.

"If I were in Goldman Sachs' shoes, before adding hundreds of millions to Northvolt, I would try to negotiate with everyone," he said. "There's no question of adding money. There's no question of withdrawing our guarantees. We're not afraid of Goldman Sachs."

Parti Québécois (PQ) Leader Paul St-Pierre Plamondon criticized the Coalition Avenir Québec (CAQ) government for investing in the parent company and debentures.

"We sent Quebec public funds to Stockholm in a company that's dying, and right now, we're being relegated to last place on the list of creditors for a project that's not happening," he said.

According to Legault, major Northvolt shareholders such as Volkswagen are afraid of losing their investments, and Goldman Sachs is prepared to reinvest rather than lose everything -- but it is asking Quebec for help, which it is refusing.

"Let's see if we're going to agree to take money from Northvolt Quebec and send it to Sweden," he said. "Stop talking nonsense."

Fréchette added during Question Period: "We're in negotiations and we're working to protect the interests of Quebecers."

"We're making sure it goes forward," she added.

However, Liberal MP Frédéric Beauchemin says he believes she "is incapable of negotiating with Goldman Sachs."

"How much is our investment worth? We no longer have any guarantees, so it's worth less," he said. "There are no more orders, so it's worth less."

In a message, a well-informed government source indicated on Tuesday that Quebec does want to preserve the $500 million invested by Investissement Québec, which could be at risk.

Goldman Sachs would apparently be willing to reinject funds to ensure the parent company's salvation as long as it secures its foreign holdings as collateral, such as the funds in Northvolt's Quebec account.

In addition, the Caisse de dépôt et placement du Québec also invested $200 million in the venture.

The $500 million invested by Quebec includes $270 million in financing for the parent company and $240 million to purchase land for the battery plant in the Montérégie.

The Legault government would keep the $240 million for the land as collateral, according to a source close to the matter.

Northvolt recently had to lay off 1,600 employees, and the Swedish government refused to help.

Quebec has already agreed to a total of $700 million, but a further $300 million is set to be paid in debentures, a long-term unsecured loan subject to certain conditions.

Legault mentioned that two of the conditions have not yet been granted.

The first was that project financing be completed, and the second was that the plant be under construction.

The site has not reached that stage.

Quebec's total investment could total $1 billion for a project estimated at $7 billion, of which Ottawa is also contributing $1.37 billion.

The federal government has yet to contribute a penny.

-- This report by The Canadian Press was first published in French on Oct. 22, 2024.