Polestar Automotive Holding UK PLC announced a subordinated term loan facility of up to USD 600 million, signed on December 16 2025, with a subsidiary of Geely Sweden Holdings AB. The facility carries an interest rate of Term SOFR plus 3.00 % and matures six months after each utilization date. The loan is potentially convertible into Polestar shares and is uncommitted until lender consent is obtained for the second USD 300 million tranche, which will be released only if the company’s cash‑flow needs warrant it.
Polestar’s cash balance stood at USD 719 million as of June 2025, down from USD 739 million at the end of 2024 and USD 768 million in 2023. The company’s average quarterly cash burn has accelerated, with a first‑half 2025 operating cash outflow of USD 498 million—roughly USD 249 million per quarter—compared to a USD 140 million quarterly burn cited in earlier reports. The higher burn reflects intensified investment in the Polestar 3 and Polestar 4 production lines and supply‑chain upgrades.
The new debt increases Polestar’s leverage and will affect its debt‑to‑equity ratio, but it does not immediately alter existing senior debt covenants. Management has indicated that the facility will be used to support vehicle production, supply‑chain investments, and capital expenditures in South Carolina, South Korea, and Slovakia. The loan also provides a buffer that may help Polestar meet the Nasdaq minimum bid‑price compliance deadline of April 29 2026, a critical milestone for maintaining its listing.
Polestar continues to invest heavily in its Polestar 3 SUV, produced in South Carolina, and the Polestar 4, produced in South Korea and China. These investments are part of a broader strategy to scale production and capture market share in the premium electric‑vehicle segment. However, the company’s gross margins remain negative, and it has reported significant net losses, underscoring that liquidity support does not resolve underlying profitability challenges.
Management has warned that the cash burn rate is “not sustainable” and that the company must achieve higher margins and scale to reach profitability. The loan’s subordinated nature means it ranks below existing senior debt, limiting its impact on immediate cash‑flow priorities but adding to long‑term debt obligations. Investors will likely view the facility as a short‑term liquidity fix rather than a transformative change in Polestar’s financial trajectory.
Polestar’s Nasdaq compliance status remains a headwind; the company has received notices and a deadline to regain compliance. While the loan may help shore up the balance sheet, analysts and investors will continue to monitor the company’s ability to reduce leverage, improve margins, and generate positive free cash flow before the compliance deadline.
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