Saab Automobile Outline in GM Business Plan Must Show Substantial Swedish Operations & Sustainable Business Plan To Receive $1 Billion Dollars In Combined Loans

Posted on 11. Feb, 2009 by in 2000-2009

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Photo Credit: Mattson / Visit Sweden

Bloomberg is now reporting that GM is said to be seeking the Swedish Government to back $600 million dollars in European Investment bank loans to keep Saab Automobile just “operating” until it can be restructured for a sale.

This loan in concert with $400 million dollars from Sweden, would apparently allow Saab to launch all of their new models, such as the 9-3x Cross-Combi, the $100 million dollars for the next generation 9-5, and 9-4x and quite possibly even the 9-1 I hope.

So if my math is correct, there are the following loans and funding available and needed for Saab Automobile to succeed.

Loan: $600 Million USD from the European Investment Bank to keep operating.

Requirement (Summarization): Must Show Considerable Sustainability in Business & Products

Loan: $400 Million USD from Swedish Government to launch products now and in the future.

Requirement (Summarization): Must Show Majority of Business & Operations in Sweden

I guess this means that Saab Automobile AB, needs $1 Billion USD, which was just $400 more than GM bought them for back in December of 1989.

Since Saab Automobile has deep roots into Sweden, moving their products to their country of origin should be easier than one thinks, and secondly with Sweden a leader in environmental sustainability and Saab following suit, this really should not be as difficult as it is. Saab as part of their Saab-Scania business were creating electric & steam powered cars as well as wind turbines as far back as the nineteen seventies!, and fast forward to their interests in Bio-Hybrids in the near future, again, Saab Automobile should be well positioned to receive these loans.

The 400 lb gorilla in the room however is GM, because according to Saab Automobile’s Global Communication Director, Eric Geers, if these requirements are not best illustrated in the GM business plan, there will be tough consequences for Saab Automobile’s future.

What’s interesting about this “constant dialog” is where Eric Geers said that GM “must have” a plan by next Tuesday, which makes me think he’s talking in a sort of spirited hope that GM comes through. Furthermore, this makes me believe that this constant dialog is not as constant as one might think considering that quite possibly the folks at Saab Automobile in Sweden are “hoping” GM includes a plan for them, which I hope is not the scenario. As we know, allowing GM to be left to their own devices is not a situation anyone wants.

All in all, these loans require first and foremost, that the company have a majority of ownership and operations in Sweden and that their products are environmentally friendly and fully sustainable. This should be not problem for Saab unlike General Motors, so here’s hoping we get some positive results on Super Tuesday (February 17th, 2009)

Without further delay, here is the piece from Bloomberg:

GM Said to Seek Swedish Backing for $600 Million to Fix Saab

By Jeff Green and Niklas Magnusson

Feb. 11 (Bloomberg) — General Motors Corp. is asking Sweden to guarantee $600 million in European Investment Bank loans to keep the Saab Automobile unit operating until it can be restructured for sale, a person familiar with the talks said.

The loans, along with about $400 million (3.36 billion kronor) from GM, would allow Saab to introduce new models that would keep Saab competitive, said the person, who asked not to be named because the talks are private. If Saab doesn’t get the aid, it may be forced into restructuring under Swedish law, the person said.


It is “possible” that GM has told the government that any decision by Sweden not to help Saab may lead to the consequence that Saab is put into administration or closed down, said Saab spokesman Eric Geers. He declined to comment on the potential size and structure of a government aid package. GM spokeswoman Joanne Krell had no comment.

GM is trying to have a solution for Saab by Feb. 17, when it must present a progress report to the U.S. Treasury on how it will become viable so it can repay $13.4 billion in government loans by 2011. Yesterday, GM said it would cut 10,000 jobs and trim U.S. salaries as it negotiates for concessions from the United Auto Workers union and bondholders.

GM, Saab and the Swedish government are in a “continuous dialogue” about aid for Saab as GM must have a plan ready by next week, Geers said in a telephone interview today. GM said Dec. 2 it would seek a buyer or other options for Saab.

Swedish Auto Aid

Sweden’s government has pledged 28 billion kronor to support automakers including Volvo Cars and Saab Automobile. The package, which aims to spur development of fuel-efficient vehicles and ease the manufacturers’ access to funding, provides Sweden’s carmakers with a 5 billion kronor rescue loan, additional funding of as much as 3 billion kronor for research and development as well as credit guarantees of 20 billion kronor for loans by the EIB.

GM wants the loans so it can introduce new models, such as the 9-4X sport-utility vehicle and a redesigned 9-5 sedan, said the person familiar with the situation.

The Swedish government wants GM to commit support beyond the introduction of the new models, which the Detroit-based automaker is unable to provide, said the person. GM bought 50 percent of Saab in 1990 and purchased the rest of the company in 2000 from Sweden’s Wallenberg family. GM sold 93,295 Saab models worldwide last year, a 25 percent decline.

“Of course Saab is important,” said Swedish government spokeswoman Lisa Waern. “They must have sustainable plans for the future.” The government has said it will give guarantees only to companies that have a sound business plan, and it won’t comment on whether GM has such a plan for Saab.

Restructuring in Sweden

Under Swedish law, a bankrupt company is then taken over temporarily by an administrator, often a lawyer, whose task it is to share the remaining money among those with claims on the company.

Kronofogden, the Swedish enforcement agency, supervises the bankruptcy administrators and ensures that they perform their task correctly.

Companies that apply for direct loans from Sweden must have a majority of their business in Sweden, while automakers applying for a government-backed loan from the EIB must use the money to develop green technology.

Ford Motor Co.’s Volvo Cars unit has asked for a loan of 5 billion kronor from the EIB, backed by Sweden, to help it make environmentally friendly cars and keep production local.

The EIB couldn’t immediately be reached for comment.

To contact the reporter on this story: Jeff Green in Southfield, Michigan at jgreen16@bloomberg.net; Niklas Magnusson in Stockholm at nmagnusson1@bloomberg.net.

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