Feb 23 Reuters Volvo Cars said on Friday it plans to distribute 62.7 of its stake worth 9.5 billion crowns 920.17 million in Swedish electric vehicle manufacturer Polestar Automotive Holding to its own shareholders.

After completion of the proposed distribution, Swedenbased Volvo Cars said it will retain an 18 stake in Polestar.

The heavy involvement by Swedenlisted Volvo Cars in Polestar, where it owns around 48 of the shares, has been criticised by analysts who see the stake as a drag on Volvo39;s resources.

As we have significant operational collaborations with Polestar and a financial relationship, it is logical for us to retain influence through a smaller 18 stake in Polestar, said President and CEO of Volvo Cars Jim Rowan.

The company said it has a financial relationship with Polestar through an outstanding convertible loan of 1 billion.

China39;s Zhejiang Geely Holding GEELY.UL, which is a majority owner of Volvo Cars, will continue to provide operational and financial support to Polestar.

The stake distribution will be made through a 21 share split, followed by an automatic share redemption process, Volvo Cars said.

1 10.3242 Swedish crowns

Reporting by Rishabh Jaiswal and Shivani Tanna in Bengaluru; Editing by Sherry JacobPhillips

Source Reuters