Stegra engages restructuring expert to help find financing

Swedish startup Stegra (formerly H2 Green Steel) has appointed a restructuring expert to its board of directors as the company struggles to avert a financial crisis, Bloomberg reports.

The company recently announced a new round of financing, planning to raise an additional €975 million ($1.1 billion) to cover higher-than-expected project and infrastructure costs and to fill the gap caused by delays in government grant support.

In addition, Stegra announced personnel changes to its board of directors. Harald Mix, the company’s co-founder and financier, stepped down as chairman of the board and was replaced by Sean Kingsbury.

Aidan de Brunner, who currently works with the troubled British water company Thames Water, will join the board of directors. Emmanuel Rodriguez, who has experience leading decarbonization initiatives in the steel industry, particularly at ArcelorMittal SA, has also joined the board.

The startup is building the world’s first large-scale green steel plant in Boden, Sweden. Over the past four years, the company has raised around €6.5 billion for the project.

However, the press has recently drawn parallels with Sweden’s Northvolt, which was supposed to become China’s main competitor in the EU for the production of electric vehicle batteries but went bankrupt last year.

Stegra and Northvolt have a similar financing model and a key investor, Mix. However, the green steel startup insists that they have little in common.

In particular, the Financial Times draws parallels with Northvolt, noting Stegra’s financial vulnerability. The publication estimates the latter’s funding shortfall at just over SEK 16.5 billion and writes that the startup’s urgent capital needs have tripled in the last three months.

“The risk of insolvency was discussed at a recent board meeting on the advice of the group’s lawyers after delays and cost overruns affected the company,” the FT notes.

The publication’s source also pointed out that investors are beginning to realize that their funds will almost certainly be lost.

Henrik Henriksson, CEO of Stegra, told the FT that he disagrees with the “very one-sided picture that is emerging.”

“Our ongoing negotiations are constructive and on track, and I am confident that we will be successful in this round of financing,” he added.

Earlier, Stegra reported operating losses of just over SEK 2 billion ($209 million) for 2024, compared with SEK 657 million a year earlier.

As GMK Center reported earlier, major European steel companies are postponing their green transformation plans, hoping for greater certainty, including regarding the bloc’s steps to protect the industry and the market.