The battery startup Britishvolt is in talks with an Indonesia-linked oil and gas investor for a £160m rescue deal that would almost wipe out the value of existing shareholders’ stakes.

The investor consortium is led by DeaLab Group, a UK-based private equity investor that has been involved in several fossil fuel and renewable energy transactions in Indonesia, and an associated metals business, Barracuda Group.

A takeover of the project, if completed, would provide welcome relief for employees and enable the company to continue its ambitious effort to build a factory capable of making 30 gigawatt hours of batteries every year – enough for hundreds of thousands of cars. Building gigafactories is seen as a key aim by the UK government, which pledged £100m in financial support to the project.

Britishvolt’s site, near Blyth in Northumberland, is seen by many in the automotive industry as one of the UK’s best potential locations for a gigafactory because of proximity to power lines carrying renewable energy and a deep-sea port. However, the startup reached the brink of collapse in October as it ran out of money, with building work on the factory mostly halted since the summer.

Under the terms of the rescue deal, the investors will pay £30m for 95% of the business – a deal that would leave existing shareholders including co-founder Orral Nadjari and FTSE 100 companies Glencore and Ashtead with 5% of the business worth less than £2m. The consortium would then commit a further £128m to fund the next stage in Britishvolt’s plan.

The deal was organised by Somerley Capital, a Hong Kong-based corporate finance adviser. Britishvolt on Monday announced it was in talks with unnamed investors to end weeks of uncertainty over its future.

Britishvolt did not name other investors who are backing the consortium. A spokesperson declined to comment, beyond reiterating a statement confirming that “Britishvolt is in discussions with a consortium of investors concerning the potential majority sale of the company.”

The startup had said it planned to achieve the “long-term sustainability and funding necessary to enable it to pursue its current plans to build a strong and viable battery cell R&D and manufacturing business in the UK.”

The takeover is due to be discussed by Britishvolt’s board on Friday. However, it would value the company at less than £32m, a far cry from a year ago when it reportedly achieved the coveted “unicorn” status, or a valuation of more than $1bn (£820m).

The executive chairman, Peter Rolton, wrote to existing shareholders asking for their approval for the deal to avoid administration, which would be “catastrophic for all concerned”.

Rolton wrote that the company’s first priority would be to complete a “scale-up facility” in Hams Hall, Warwickshire, which would enable the company to test processes as well as potentially giving it its first source of revenues.

Britishvolt said DeaLab had previously been involved in a series of deals worth more than $1bn with links to Indonesia. These included the purchase of oil, gas and coal interests, as well as geothermal energy and telecoms businesses.

DeaLab and Barracuda Group are owned by Reza Eko Hendranto, an Indonesian banker who formerly worked at the US investment bank JP Morgan, according to a social media profile. Barracuda is working with an Indonesian partner on a project to extract battery metals including nickel.

DeaLab Group Limited is listed on the UK companies register as a dormant company. Its annual UK company accounts are overdue. Not filing an annual report is a criminal offence, and is generally seen as a red flag for companies carrying out due diligence, although the maximum financial penalty for late filing is only £1,500 for a private company.

The investment bank Lazard and private investment and advisory group Full Circle Capital also worked on fundraising.

DeaLab, Barracuda and Somerley were approached for comment.