Reports suggest that beleaguered UK-based battery start-up Britishvolt is close to been rescued through a refinancing deal that would value the company at less than 10% of its valuation at the start of 2022.

The lead investor is believed to be DeaLab Group Limited, an Indonesia-linked investment group that has proposed £158Mn (US$192Mn) refinancing to keep the UK’s front-running, large-scale lithium-ion gigafactory in business. The refinancing would involve existing shareholders taking a considerable haircut on their initial investment, essentially diluting their existing investment from 100% to just 5% as part of the deal. Those shareholders include FTSE 100 listed companies Glencore and Ashtead, the former having been central to an earlier temporary rescue deal for Britishvolt late last year.

The two big questions are:

1) Is the equivalent of pennies on the pound for the existing investment group an acceptable exit?

The alternative potentially involves more formal insolvency procedures and most likely less pennies on the pound, so yes!

2) Will new investment unlock the “promised” UK government investment in Britishvolt, starting with £100Mn (US$122Mn) contingent on beginning construction work on its Northumberland site?

A working capital injection of £128Mn (US$156Mn) for 2023 is small change in gigafactory build-out terms so it is hard to imagine that this question hasn’t already been asked by the new potential investors, and answered!