2nd UPDATE:Group Led By Sweden's Koenigsegg To Buy GM's Saab Operations
17 June 2009 - 2:45AM
Dow Jones News
Saab Automobile AB has another shot at survival after a
consortium led by Swedish boutique sports-car maker Koenigsegg
Group AB agreed to a preliminary deal to buy the troubled company
from General Motors Corp. (GMGMQ)
The deal is a major step toward resolving unknowns facing GM as
it navigates through bankruptcy court. Saab's long-term future,
however, remains uncertain.
If the deal goes through, Koenigsegg, founded in 1994 by a
22-year-old entrepreneur to make cars for the super-rich, faces the
difficult task of reversing years of mounting losses and sales
declines at Saab.
Saab, part of GM since 2000, was put up for sale earlier this
year as part of the auto maker's efforts to return to
profitability. Steady sales declines at Saab accelerated
dramatically in recent months, with the brand's future in
question.
Just 783 Saab models were sold in the U.S. during May, a fall of
64% and less than the Hummer truck brand being offloaded to Chinese
investors. May sales in Europe slumped 66% to 2,191 last month,
according to data released Tuesday.
"There are enormous obstacles to overcome" in saving Saab, HIS
Global Insight analyst Tim Urquhart's said in a research note
Tuesday. "Not least [is] ensuring that the company can limit its
cash burn and buy sufficient time and attract funding to underpin a
turnaround."
Shareholders in the new company are Koenigsegg, with a 23.4%
stake, its owner and Chief Executive Christian von Koeningsegg's
firm Alpraaz AB with 42.6%, Norwegian holding company Eker Group
with 11.8% and San Diego-based Mark Bishop with 22.2%, according to
court documents. Saab's sales price hasn't been disclosed.
Saab was granted creditor protection in Sweden on Feb. 20 and GM
said it wanted to offload the unit by the year's end. The sale,
expected to close by the end of the third quarter of this year,
includes an expected $600-million funding commitment from the
European Investment Bank guaranteed by the Swedish government, the
companies said in a statement.
Additional financial support is to be provided by GM and
Koenigsegg to fund Saab's operations and program investments,
including plans to launch several new products that are in the
final stages of development, such as the long-awaited revamp of
Saab's flagship 9-5 model. As part of the proposed transaction, GM
will continue to provide Saab with design and powertrain technology
during a defined time period.
The deal comes a day before a Swedish court is expected to
approve Saab's proposal to slash its debt to hundreds of creditors.
Saab has proposed under the plan to settle its debts by paying 25%
of around $1.34 billion owed to more than 600 creditors, including
auto suppliers and the Swedish government. The vast majority of the
debt is owed to GM.
Saab spokeswoman Gunilla Gustavs said Tuesday that GM's
tentative agreement with Koenigsegg doesn't change the outlook for
Wednesday's court case.
Meantime, haggling continued over GM's Adam Opel GmbH European
unit. Fiat SpA (FIATY) is still vying for Opel after the German
government chose Magna International Inc.'s (MGA) consortium over
Fiat's offer and pledged to provide bridge financing to keep the
company afloat.
-By Sharon Terlep, Dow Jones Newswires;
sharon.terlep@dowjones.com; 248-204-5532
(Guglielmo Valia, Gustav Sandstrom and Ola Kinnander contributed
to this report.)