The Australian-American company that rode to the rescue of the failed Northumberland car battery business Britishvolt has failed to pay the final instalment in its purchase of the company, according to official documents.
According to a progress report by Britishvolt’s administrators, EY, the £8.57million price agreed by Recharge Industries for the business was “payable in a number of instalments.”
The report continues: “The final instalment remains unpaid and overdue. As a result, the buyer is in default of the business sale agreement.”
In a statement, Scale Facilitation, the parent company of Recharge Industries, said “we dispute we are in default” of the business sale agreement.
They added that “the timing of the final instalment to the administrator is linked to a funding facility which when closed will also cover the cost of the land acquisition and provide additional working capital for the project. The financier is in direct contact with the counterparties, and we anticipate closing in August following a period of significant due diligence.”
What has happened so far?
Britishvolt, which had planned to build a £3.8 billion battery gigafactory with a promise of £100m in grant funding from the UK government, entered administration on 17 January 2023.
On 27 February it was announced that the Australian battery startup Recharge Industries, owned by New York-based Scale Facilitation, would take over the business.
In May it emerged that Recharge Industries had yet to take possession of the land in Cambois, Northumberland, where a battery factory could be built. The company had refused to settle a £9.7 million pound debt with Katch Fund Solutions, which would allow it to take ownership of the land, until a dispute with Northumberland County Council of a buy-back clause over the land is resolved.
In a statement, Northumberland County Council said: "We are continuing to work closely with representatives of Recharge on a range of financial and legal points associated with this significant transaction and investment into our county."
In June, the Australian offices of Scale Facilitation, which is owned by businessman David A. Collard, were raided by the serious financial crime task force of the Australian Federal Police and the Australian Tax Office as part of an investigation into an alleged taxation fraud.
At the time, Scale Facilitation said: “We deny any wrongdoing and will continue working with our legal and other advisors to defend any matters arising from these discussions.”
But Sean Johnson, an Australian political consultant who writes for the website openpolitics.au, said the investigation has been a big blow to a company which “was sort of a great white hope for the Geelong region outside of Melbourne.”
“It was saying that it was going to build this shiny new lithium battery company, so this had a lot of political support on both sides of the spectrum.”
The tax investigation, he said, was “a big shock inside politics, because there had been a lot of political support for it, both at the local level but also nationally.”
What has the reaction been?
Ian Lavery, MP for Wansbeck, said: "This is extremely concerning news and will do nothing to give confidence to the community who are crying out for this investment. I have spoken to David Collard only this week and he has assured me that despite some difficulties the project will continue. I remain hopeful this much-needed project will be developed on this site."
Professor Colin Herron, an expert in the electric vehicle industry from Newcastle University, said the news that a payment had been missed in the takeover was “a big worry”.
“Any news like that has to raise a doubt on the concern over the plant and what's next for their site,” he added.
In terms of the future of the site, a “perfect location” for building a battery factory, Prof Herron said the challenge was that those, like him, tasked with planning for future training and infrastructure for the battery industry, is that “we keep trying to second guess what's going to happen. And it's very difficult to build a support system when something gets delayed and delayed and we don't know what format it's in.”
What happens next?
Administrators EY say they “are using the protections and guarantees afforded in connection with the business sale agreement to pursue the outstanding amounts due from the buyer.
The added that as a result of the “commercial sensitivities surrounding the current status of this matter” they would not comment on the situation any further.
The next update will be posted either when the administration concludes, or in six months’ time if it is still ongoing.
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