Questions from Brussels may threaten Saab sale

An emergency loan vital to completing the sale of Saab Automobile has been held up by questions from the European Commission, possibly jeopardizing the proposed deal.

• Saab suffers US and Swedish sales slump (4 Nov 09)
• European bank approves Saab loan request (21 Oct 09)
• Saab sales continue to crash in Europe (15 Oct 09)

The Commission has a number of questions about the state guarantees provided by Sweden in connection with the loan, which recently won approval from the European Investment Bank (EIB).

The scrutiny from officials in Brussels means the deadline for final approval of the loan could be pushed back as late as January.

Saab’s current owners, US-based General Motors (GM) has been clear about wanting to sell the troubled unit by the end of the year at the latest.

Having the loan in place is a prerequisite for luxury Swedish carmaker Koenigsegg and China’s BAIC to complete their proposed purchase of Saab.

According to a document reviewed by the TT news agency, the European Commission wants assurances that Saab did not have economic problems last summer which could have impeded eligibility for state subsidies.

In addition, the Commission wants additional information about the model used by the National Debt Office (Riksgälden) in showing that Saab was eligible for state guarantees for the entire loan.

The Swedish government can only begin to examine whether it will actually guarantee the approximately 4 billion kronor ($570 million) loan after the Commission issues its ruling.

Until then, Saab won’t have access to the money and the deal which would make Koenigsegg Group the automaker’s new owner can’t be completed.

An initial agreement signed by GM and Koenigsegg Group in June included language stipulating that the deal would be completed by the end of September.

Earlier this autumn, Saab CEO Jan Åke Jonsson warned that the sale would not be complete until the end of October.

Now Saab spokesperson Eric Geers has indicated that a few more weeks may elapse before pen can be put to paper – but everything hinges on a decision from the European Commission.

After receiving the additional information now requested from Sweden by the Commission, it has two months to issue a ruling on whether or not to approve the loan.

With the material not expected to be in the hands of the Commission before November 17th, it may take until January for a final ruling, although the Commission may reach a decision earlier.