Britishvolt was teetering on the brink of collapse on Monday, after ministers turned down a request for emergency funding and the embattled battery start-up made a final effort to secure a private rescue to avoid bankruptcy.
The company, which planned to develop a £3.8bn gigafactory in the north-east of England, had been preparing to appoint administrators earlier on Monday, according to three people with knowledge of the matter.
The move had been triggered in part by a government decision over the weekend to reject a request for £30mn funding, which the company needs to prevent it running out of cash within weeks.
Talks with outside investors restarted on Monday, according to the people familiar with the situation, with the company trying to raise short-term financing until a longer-term acquirer can be found.
A short-term deal with one new investor, which would secure enough funding for several more weeks, was being negotiated on Monday evening, two people familiar with the negotiations said.
Entering administration in the coming days remains the most likely outcome, two of the people said. A restructuring and insolvency team from EY was brought in to advise the board in recent weeks on preparations for a potential administration. EY declined to comment
Britishvolt, which is backed by FTSE 100 mining group Glencore, said it was “actively working on several potential scenarios that offer the required stability”.
Britishvolt had earlier held talks with a number of potential buyers, including India’s Tata Motors, which owns Jaguar Land Rover.
The potential collapse of the company marks the end of a dream, promoted by former prime minister Boris Johnson, of a homegrown battery champion for the UK, but paves the way for a more established manufacturer to take over the proposed factory site in Blyth, Northumberland.
Any administration is likely to trigger a rush to secure the rights to the Blyth location, which the business had planned to develop into a £3.8bn gigafactory.
Several other companies have been in talks with landowners to express their interest in the site, which is reckoned to be one of the best in Europe for battery manufacturing because of its deep seaport, rail links and clean energy.
Automotive leaders and analysts had always questioned the company’s strategy of setting up a factory before securing firm orders from a car manufacturer, rather than following the established industry pattern of finding a customer and then building a plant.
Recently, the business’s current leaders have been trying to raise smaller sums in order to buy time. The company has around one month’s cash left, according to two people briefed on the matter.
Ministers had promised the company £100mn, but the funding was only to be drawn down as construction work hit a certain milestone, which has not yet been reached. Britishvolt executives had been trying several government avenues to unlock further financial support.
Over the weekend, Grant Shapps, who has been business secretary since last Tuesday, decided he could not hand over taxpayers’ money to the company after concluding that its management was “totally chaotic” and had failed to reach agreed targets.
There was an “awful lot of communication” between company executives and government, an ally of Shapps said.
“The idea that the government ignored them and let them fall into insolvency is not true,” the ally added.
Within the past month, the company diverted funding from the site in Blyth to some of its battery work in order to try to preserve its dwindling cash reserves and to generate orders that would give it badly needed revenues.
Separately on Monday, electric taxi maker LEVC said it would lay off about 20 per cent of its staff, or around 140 roles.
Additional reporting by Michael O’Dwyer and Arash Massoudi