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European bank approves Saab loan request

TT/AFP/The Local · 21 Oct 2009, 14:49

Published: 21 Oct 2009 14:49 GMT+02:00

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Prior to Wednesday’s meeting, most indications were that the EIB board, which includes representatives from all 27 European Union members states, would approve Saab’s request.

The EIB leadership group had recommended to the board that the bank agree to lend the Swedish car company up to €400 million, or roughly 4.1 billion kronor ($590 million), having concluded that Saab’s application was sufficiently strong.

The loan is a critical lifeline for Saab, and was a key element for the planned takeover of the company by the Koenigsegg Group.

“It wasn’t totally unexpected. It was an incredibly important step for Saab’s future. Without the loan, it would have been a nonstarter,” Jöran Hägglund, a state secretary with Sweden’s industry ministry, told the TT news agency.

The money, mainly targeted at cleaner and more fuel-efficient production, marks a huge step towards the purchase of Saab from its US parent company General Motors by Swedish sports car maker Koenigsegg and Beijing Automotive Industry Holding Co Ltd (BAIC).

"The loan will be used for research and development activities for the improvement of fuel efficiency and safety including new tooling for the production of cleaner and safer cars, subject to the European Commission's approval of the Swedish state guarantee," said a statement by the EIB.

Stockholm has repeatedly refused to take a stake in Saab, but Koenigsegg had asked the Swedish government -- unconvinced about its business plan -- to act as a guarantor.

Koenigsegg had been short 3 billion kronor to complete the acquisition of Saab first announced in June, though the total purchase price has never been disclosed.

Saab employs 3,400 people in Sweden alone and sold just over 93,000 cars worldwide in 2008.

Story continues below…

Koenigsegg Group, founded in 1994, has just 45 employees and produces 18 high-end sports cars a year at more than a million euros ($1.4 million) each.

Under GM's stewardship, Saab rarely posted a profit and last year lost 3 billion kronor.

TT/AFP/The Local (news@thelocal.se)

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Your comments about this article

15:51 October 21, 2009 by Nemesis
This is good news.

Now maybe the nay-sayers will be proven wrong and be shown that Swedish people can run a company.

I hope Koenigsegg Group does suceed and wish them the best for there future.
16:03 October 21, 2009 by Twiceshy
I hope the Swedish government doesn't guarantee the loan... the last thing the Swedish taxpayer needs is to get involved in the failing car business.
17:29 October 21, 2009 by spy

This will have no negative effect on the Swedish taxpayer whatsoever. The Swedish National Debt office will secure any government guarantee against Saab Automobile itself (ie land, buildings, factories etc.)

In actual fact there are about 15,000 taxpayers who will be positively effected as they will have their future secured. Plus increased security for suppliers and the other companies (such as Volvo) who rely on them too.
22:33 October 21, 2009 by Twiceshy
Then why don't banks guarantee the loan? Governments are usually the lenders of final resort when the private sector is too smart to get into a deal.

Something tells me those lands, buildings and factories won't be worth even near the loan amount. So in the end, taxpayers might lose a lot. Except for those 15,000 of course :P
02:22 October 22, 2009 by RoyceD
lets see then, if Saab ends up going under the Swedish people and tax paying immigrants loose, if the company does well profits are funneled over to GM. So the best we can hope for if they approve the loan is for Saab to just break even.
05:28 October 22, 2009 by falcon
Colossal Mistake.

No money of their own. No experience. All borrowed.

Saab deserves better.
13:37 October 22, 2009 by spy

To address your 2 rather ill informed points:

1) The EIB have money set aside specifically for the automotive industry. Why on earth would any car company go to a bank????

2) Regarding state guarantees and the valuing of Saab's securities: The National Debt Office is likely to under value Saab securities as the Swedish govt will not risk even a kronor of taxpayers money.

It's a complicated subject but these are the facts.
19:07 October 22, 2009 by Twiceshy
1) To guarantee the loan, of course. Banks and insurance companies often do loan guarantees.

2) That's just your assumption. Not a fact.
19:28 October 22, 2009 by spy

I think you are confused. . .

Banks do not guarantee loans - they give them!

And my remarks on the NDO are based on government policy and statements and from information from all concerned in the evaluation of Saab's securities.
19:42 October 22, 2009 by Twiceshy
Banks guarantee loans all the time... when you get a mortgage, it's guaranteed by the house as collateral. There are also credit default swaps for guaranteeing unsecured loans like this one.
09:10 October 23, 2009 by spy

No.. . They give out large loans only if there is sufficient collateral. Which is exactly what the NDO is trying to evaluate for Saab.

I think bank shareholders would be pretty unimpressed if banks were guaranteeing large unsecured loans. . .
09:39 October 28, 2009 by duketheduke
Back to the topic...this is a god news for Saab as it still continues to exist. knoessig is is one of the most expensive cars i have encountered. they have just released the CCX edition with a hefty price tag. Looks stylish, though. In fact, it has become subjects of koenigsegg wallpapers
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