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EU approves Sweden's Saab loan guarantee

AFP/The Local · 8 Feb 2010, 12:44

Published: 08 Feb 2010 12:44 GMT+01:00

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The European Commission ruled that 83 percent of the $400 million ($600 million) loan was in line with temporary EU rules on state aid measures, drawn up to help companies through the economic and financial crisis.

The remaining 17 percent will be provided on market conditions and therefore does not constitute state aid, the commission stated.

"The state guarantee will contribute to the implementation of Saab's business plan without giving rise to any undue distortions of competition," said EU Competition Commissioner Neelie Kroes.

In particular, Saab will pay "an adequate remuneration" for the guarantee and provide sufficient securities in case the guarantee would be drawn.

Sweden announced last month that it will guarantee the loan following a decision by US automaker General Motors to sell Saab to Dutch luxury sports car maker Spyker.

As part of the agreement, Spyker will form a new company, Saab Spyker Automobiles, that will carry the Saab nameplate forward.

Story continues below…

GM officials said the deal called for Spyker to pay $74 million in cash and allow GM to retain redeemable preferred shares worth an estimated $326 million.

The Swedish loan is to help Saab produce less polluting and more eco-friendly cars.

AFP/The Local (news@thelocal.se)

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Your comments about this article

13:01 February 8, 2010 by Alex Coman
Good thing for them. Now Saab must come with something totally new for them (no, not eco-friendly cars), for the last years - with The Profit.
16:49 February 8, 2010 by Henckel
Finally, after all their mistakes, false starts, and hemming and hawwing, the GM management has finally done the right think. Best of luck for Saab under their new management!
21:50 February 8, 2010 by rugla
Obviously one will like to hope for the best, but given their track record and volatility of the structure, many of my auto industry analyst and I give them at most two to three years before they are in the same situation, the difference is the government will be left holding the empty bag!
16:50 February 9, 2010 by morchad
better than 15,000 direct & indirect unemployed.....cheaper for government to be caught for this than bear the burden of lost tax revenue & paying unemployment
18:52 February 9, 2010 by spy

I think you are confused why do you think the Swedish government could be left holding the 'empty bag'?
18:55 February 11, 2010 by Ghostrider
Why loan money to a company that loses money to buy a company as important as Saab? Spyker has a poor reputation and the owner has lost many past partners.
20:20 February 11, 2010 by spy
The answer is that there is a business plan for Saab that is supported by the Swedish Government, GM, plus the EIB, I am sure, will support it too.

Also I would say Victor Muller has had his sucesses too. . .
02:43 February 12, 2010 by Ghostrider
I also feel Saab must have a viable plan. That said, have you personally seen Mullers financial statements? My review shows Spyker has never made a profit, never. He has left many harmed in his wake, including his partner at Spyker.

You are etitled to your opinion but I have never read anything redeeming about Mr. Muller or Spyker. Only losses. The deal looks to be 100% leveraged (even the equity is now borowed) and all of the high % debt will not help save Saab.
08:03 February 12, 2010 by spy
Fair enough but I disagree that he has not made a profit ever, he has taken a number of companies to market including a petro company and a fashion group.

Yes the Saab deal is leveraged, who would not leverage when buying a car company? And the debt he used to buy his shares will be his debt and not Saabs.
14:41 February 12, 2010 by Ghostrider
Leverage is leverage - all must be repaid. 100% leverage is problematic as it inhibits resources for future development. Many highly leveraged auto concerns have failed recently. Fashion Group? Where is the auto background? With Saab's condition, this isn't your average undertaking - it is a major turn around.

No response to the litany of former partners who have nothing good to say? The poor record of Spyker? Antonov?

We can hope for the best.
14:57 February 12, 2010 by spy
I am not sure you understand he has NOT borrowed against Saab to raise the finances to purchase Saab (!!!) he has borrowed personally and therefore he has to repay personally so this has no impact on the Saab business case at all.

I understand your concerns regarding his deemed lack of Auto experience but let's face it the auto industry needs some fresh thinking and a reference point outside of its own sphere. He has proved he is tenacious let's see if he can be entrepreneurial with Saab too.

I wasn't aware that I needed to respond to your every word but I think it is clear that Antonov, as a partner, is more miffed with the Swedish Intelligence (oxymoron) Service and GM for alleging that he had Mafia links with apparently no grounding whatsoever.
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