Polestar Completes USD 640 Million Debt-to-Equity Conversion to Strengthen Capital Structure
Polestar (Nasdaq: PSNY) has completed a significant financial restructuring initiative, announcing the successful conversion of approximately USD 640 million of shareholder debt into equity during the first half of 2026. The move, carried out with the support of its major shareholders Geely Sweden Holdings AB and Volvo Cars, is designed to reinforce the company’s balance sheet, reduce leverage, and extend its overall debt maturity profile as it continues expanding its global electric vehicle portfolio.
The latest conversions represent another milestone in Polestar’s long-term financial strategy, providing additional flexibility as the premium electric performance vehicle manufacturer scales production, introduces new models, and strengthens its position in the increasingly competitive global EV market.
Major Debt-to-Equity Conversions Completed
On June 30, 2026, Geely Sweden Holdings AB converted approximately USD 300 million of its outstanding shareholder loan into Polestar equity. During the same transaction period, Volvo Cars converted approximately USD 66 million of its shareholder loan into equity.
These latest conversions bring the total amount of shareholder debt converted into Polestar shares by the two strategic investors to approximately USD 640 million since the beginning of 2026.
Debt-to-equity conversions are commonly used by companies to improve their financial position by replacing debt obligations with equity ownership. Such transactions reduce future interest expenses, strengthen shareholders’ equity, and improve leverage ratios, creating a healthier balance sheet while preserving liquidity for ongoing business operations and strategic investments.
Despite the substantial conversion activity completed this year, Polestar confirmed that approximately USD 660 million of Volvo Cars’ remaining shareholder loan remains outstanding. As previously announced, this loan has a maturity date extending through December 2031, providing the company with a long repayment timeline and reducing near-term refinancing pressure.
Capital Structure Continues to Improve
The completed conversions represent a key component of Polestar’s broader financial transformation strategy. By converting shareholder loans into equity, the company has significantly reduced its debt burden while simultaneously increasing shareholders’ equity.
A stronger capital structure is particularly valuable for automotive manufacturers, especially companies operating in the electric vehicle sector where substantial investments are required in research and development, manufacturing, battery technologies, software platforms, charging ecosystems, and international market expansion.
Reducing debt also provides greater financial resilience amid changing market conditions, fluctuating interest rates, and evolving consumer demand for electric vehicles worldwide.
The transaction demonstrates continued financial backing from Polestar’s largest strategic shareholders, reinforcing their long-term confidence in the company’s growth strategy and future product roadmap.
Extension of Geely Loan Facility
In addition to the completed equity conversions, Polestar announced further progress in strengthening its financing arrangements.
On June 3, 2026, the company reached an agreement with Geely Sweden Holdings AB to extend the maturity of the outstanding subordinated term loan facility originally established in December 2025.
Under the revised agreement, the remaining balance of the subordinated loan facility will now mature on June 30, 2027.
The extension provides Polestar with additional financial flexibility by postponing repayment obligations and allowing management to focus on executing operational priorities rather than addressing near-term debt maturities.
Extending loan maturities is a common strategy for companies investing heavily in growth, as it aligns financing obligations with future business expansion and anticipated revenue generation.
Green Trade Finance Facility Expanded
Polestar also strengthened its financing resources through an expansion of its Green Trade Finance Facility (TFF).
Following completion of the required loan documentation, the facility was increased on June 5, 2026, by an additional EUR 50 million.
The increase raises the total value of the Green Trade Finance Facility from EUR 400 million to EUR 450 million.
The expansion was made possible through the addition of Fubon Bank (Hong Kong) Limited as a new participant in the lending syndicate supporting the facility.
Meanwhile, Standard Chartered Bank continues serving as both Structuring Bank and Facility Agent, maintaining its central role in administering the financing arrangement.
Green Trade Finance Facilities are specifically designed to support environmentally sustainable business activities, making them particularly relevant for manufacturers focused on electric mobility and clean transportation technologies.
The additional financing capacity provides Polestar with increased liquidity to support supply chain activities, production operations, inventory management, and international business growth.
CEO Highlights Stronger Financial Foundation
Commenting on the latest financial developments, Polestar Chief Executive Officer Michael Lohscheller said the completed transactions mark another important step in strengthening the company’s financial position.
He noted that the debt-to-equity conversions completed by Geely Sweden Holdings AB and Volvo Cars, together with the extension of existing financing facilities, improve Polestar’s capital structure while extending the company’s debt maturity profile.
According to Lohscheller, these actions position the company to continue accelerating the rollout of its expanding vehicle portfolio and support its broader growth ambitions.
The CEO emphasized that the improved financial framework aligns with Polestar’s strategy of scaling production, launching new vehicles, and expanding its presence across international markets.
Details of the Conversion Pricing
Polestar also disclosed the pricing methodology used for the debt-to-equity transactions.
The conversion of approximately USD 300 million of debt held by Geely Sweden Holdings AB was completed using a fixed conversion price of USD 19.34 per share.
For Volvo Cars, the conversion pricing followed a market-based formula.
The approximately USD 340 million debt conversion completed by Volvo Cars was priced at 95 percent of the 30-day volume-weighted average trading price (VWAP) of Polestar shares calculated through March 27, 2026.
Using a volume-weighted average price helps establish a conversion value based on the stock’s average market performance over a specified period, reducing the impact of short-term share price volatility.
Such pricing mechanisms are commonly employed in debt conversion agreements involving publicly traded companies to ensure fairness for both existing shareholders and participating lenders.
Supporting Future Growth
The financial measures announced by Polestar come as the company continues investing in the expansion of its electric vehicle lineup and global commercial operations.
The automaker has been working to strengthen its market position through the introduction of new premium electric vehicles while expanding sales channels across Europe, North America, Asia-Pacific, and other international markets.
As competition within the electric vehicle industry continues to intensify, maintaining access to capital and preserving financial flexibility remain critical priorities for manufacturers seeking long-term growth.
By reducing debt, extending loan maturities, and increasing available financing resources, Polestar is building a stronger financial foundation capable of supporting future investments in product development, advanced technology, manufacturing capabilities, and customer experience initiatives.
The combined impact of the USD 640 million debt-to-equity conversions, the extension of shareholder financing, and the expansion of the EUR 450 million Green Trade Finance Facility reflects a coordinated approach to improving the company’s financial resilience. With continued support from major shareholders Geely Sweden Holdings AB and Volvo Cars, alongside enhanced banking relationships, Polestar is positioning itself with greater balance sheet strength and liquidity as it advances its long-term strategy in the global electric mobility sector.
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