Sweden is unsure, but Saab finally seems sold by GM

Swedish automobile-maker Saab is being sold to the Swedish small luxury sports car manufacturer Koenigsegg, Saab’s US parent company General Motors and Koeniggsegg announced, but not everyone seemed convinced about the deal and how beneficial it would be. No mention was made of a sale price in the joint announcement, which said the deal would be completed in the third quarter of the year, using a USD 600 million credit from the European Investment Bank, backed by the Swedish government.
However, Swedish Economics Minister Maud Olofsson cast doubt on the government’s backing for the planned sale, saying she did not know at the moment “how financially strong the buyer is.”  Crucial for the future of Saab and its present 3,400 workforce, she said, was “whether the new owner has enough capital at its disposal.” The government would make a decision on guaranteeing the credit only after it had fully examined both buyer and project.
Koenigsegg had for some days been seen as the probable buyer, despite its record of having sold only 20 highly expensive vehicles in the past year. The announcement said GM would supply transmission technology for a certain period of time to the new operation, while the next generation Saab 9-5 model would continue to be made at Saab’s Trollhatten plant. Saab had been put up for sale by GM at the end of last year, and since February has been under bankruptcy protection as it attempted to reorganise its business. The Swedish government had earlier held off on offering state loan guarantees to Saab Automobile, saying it needed to get a clear picture of Saab’s new owner before putting taxpayer’s money at risk. Saab’s bankruptcy protection was recently extended to August 20. GM’s interest in Saab - one of Europe’s smallest carmakers - dates back to the early 1990s. The company took full control in 2000 but has never really been able to make a go of it with the car that is much loved by a small hardcore following of fans, including in the US.
Media reports said Saab could get as much as USD one billion and a chance to stay afloat, but only if the maker of small luxury sports cars can find a way to turn around dismal sales figures, despite the car’s reputation amongst its followers. The consortium led by Koenigsegg hopes it can revive the Saab lineup and as part of the deal, Saab cars will remain on sale in the US and the company will follow through on key vehicle launches that stalled as GM went under. Saab said it needed USD 400 million from GM to pump into Saab, which includes 150 million already given to the company to fund its restructuring, along with the EIB’s 600 million.
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.Saab has been “consistently unprofitable” since GM acquired the brand in 2000, GM Chief Executive Fritz Henderson said in an online question-and-answer session. He said a “myriad of reasons” were responsible for the failure, but expressed confidence that the new owners could turn Saab around. “We ran out of money just on the eve of launching the newest generation of Saabs, which we think will be outstanding,” Henderson said.