Volvo Gets $1.2 Billion Loan from China

The state-run China Development Bank has agreed to loan Volvo Car Corp. €922 million ($1.2 billion) to shore up the company's balance sheet as it embarks on an ambitious expansion.

Sweden's Debt Office says that after obtaining the loan deal, Volvo repaid a 3.6 billion-krona ($532 million) loan from the European Investment Bank ahead of schedule. The company says it also intends to restructure some of the €600 million ($778 million) in additional debt coming due in the next several years.

Volvo, which is owned by China's Zhejiang Geely Automobile Holding Co., signed a memorandum of understanding in April for a loan of undetermined size from the China Development Bank. Volvo is seeking additional financing from the bank to fund its growth plans.

The Swedish carmaker aims to nearly double its sales to 800,000 vehicles by 2020. But the sluggish European market has curtailed the company's sales and profits.

Volvo has launched a five-year, €8.5 billion ($11 billion) overhaul of its plants, vehicles and powertrains. Half the investment is earmarked for Sweden. Most of the rest will be spent building two car plants and an engine factory in China and developing vehicles for that market.