Volvo Cars issues $519 million worth of convertible preference shares, or preferred stock, to replace a similar sized issue that was maturing, to a group of institutional investors.
The group of Swedish institutional investors included Swedish pension fund AMF and Swedish insurance and pension savings group Folksam. The initial lot was issued in 2016.
“Today’s announcement represents a significant, continued endorsement for Volvo Cars from one of Sweden’s largest pension funds and one of the country’s leading insurance and pension savings group, who together manage assets worth SEK1100bn,” the company noted in a released statement.
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The preference shares may be repurchased or converted into common shares of Volvo Car AB. No further details on the terms of sale were disclosed. Volvo’s spent much of the last two years working on improving its financial situation.
The company said in July it would cut fixed costs by 2 billion crowns with measures to be completed by the first half of 2020, according to Reuters, which noted the automaker aimed to produce premium cars rivaling BMW and Mercedes-Benz.
In March, Volvo Cars raised 600 million euros, or $677 million, with a new bond issue. The new issue was the second in the last year for the Swedish/Chinese automaker.
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The company is looking to use some of the money to bolster is battery-electric development, in particular, its Polestar electric performance vehicle brand.
Volvo said on the Tuesday the bond would mature in April 2024, pay a fixed coupon of 2.125% and have an issue price was 99.625, equating to a yield of 2.205% and a Euro mid-swap of plus 215 basis points. The settlement was expected to be April 2, and the bonds would be listed on the Luxembourg Stock Exchange, Volvo said.
A spokeswoman for Volvo said at the time the money raised would be used for corporate purposes. It was the second time this year the company has gone to the bond market since a planned IPO was aborted last year.
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In late February, the company sold $215 million in bonds. At the time, CEO Hakan Samuelsson said this month that external finance was needed to support the development of electric cars and that Volvo was talking to Chinese and U.S. tech investors.
