STOCKHOLM (Reuters) - Chinese-owned Volvo Cars said on Monday it had sold 5 billion Swedish crowns ($519 million) of convertible preference shares to a group of Swedish investors to replace an issue of preference shares of the same size that had matured.
Volvo Cars, owned by China’s Geely Holding, said the deal was a vote of confidence in its business from major investors including Swedish pension fund AMF and Swedish insurance and pension savings group Folksam.
Carmakers are grappling with trade wars, high costs for developing electric and driverless cars, and a global industry downturn, which caused Volvo to postpone plans for a listing last year.
“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 1,100 billion crowns,” the Gothenburg-based carmaker said in a statement.
The new preference shares can be repurchased or converted into common shares of Volvo Car AB, it added.
Volvo Cars, which said in July it would cut fixed costs by 2 billion crowns with measures to be completed by the first half of 2020, aims to produce premium cars to rival BMW (BMWG.DE) and Daimler’s (DAIGn.DE) Mercedes-Benz.
Reporting by Helena Soderpalm; Editing by Niklas Pollard and Mark Potter