Green steel startup Stegra downplays insolvency fears as it seeks €1 billion: 'Investors are firmly committed'

Swedish green steel startup Stegra has confirmed it is seeking around €1bn in fresh funding to cover rising project costs at its flagship low-carbon steel plant in Boden.

Stegra – formerly H2 Green Steel – said Monday it had secured “strong initial commitments from existing investors” and was entering a new financing round to complete its green steel plant in Boden, northern Sweden.

CEO Henrik Henriksson described the continued backing from founders and lead investors as proof of “Stegra’s strong business case,” citing the company’s “competitive cost position, strong order book, and proven execution capabilities.”

The round, said Henriksson, will represent up to 15% of Stegra’s total project budget – or around €1bn.

The announcement comes as the Financial Times reports the company is facing a €1.5bn funding gap and the risk of insolvency.

Financial difficulties?

According to the FT, Stegra’s funding gap has tripled in recent months, rising from €500m in July to as much as €1.5b, as delays and cost overruns mounted. The paper also reported that Citigroup has moved the company into its “work out” division, citing concerns over its financial position.

Stegra’s board has already discussed the risk of insolvency, after legal counsel raised concerns over mounting delays and cost overruns at the Boden site, sources told the FT. One investor put it bluntly: “Equity holders are starting to accept they’ll be wiped out."

Stegra spokesperson Karin Hallstan confirmed that the financing is ongoing.

"We've been working on it (since the beginning of the summer). We have initial commitments from founders and lead investors. Now we're going broader. Will be a mix of equity, debt and strategic partnerships," she told Impact Loop via text message.

We've requested further details from Hallstan about the FT report and will update this article if we get a response.

'Investors fully committed'

Stegra, however, maintains that the project is now more than 60% complete, with a detailed plan to reach completion despite a three-month timeline extension. The new funds, it said, will cover additional groundwork, inflated material and construction costs, and the insourcing of key infrastructure such as a railway and port that were originally expected to be built by external partners.

The company also noted that the new funding will help offset a €150mn grant approved by the European Commission but withheld by the Swedish government – a sticking point that has complicated its financing efforts.

Stegra has so far raised €6.5bn from major industrial and institutional backers including the Agnelli, Maersk, and Wallenberg families, as well as Mercedes-Benz, Siemens, Scania, GIC, Altor, and Hy24.

Henriksson insists the company remains on track: “We have clear visibility and a detailed plan for the full runway up to completion,” he said. "Our founders and lead investors are firmly committed to this project."

Whether that confidence convinces Stegra’s lenders – and helps avoid the fate of its sister company Northvolt, which filed for bankruptcy earlier this year – may determine the future of Europe’s most high-profile green steel venture.