Saab Automobile AB has another shot at survival after a consortium led by Swedish boutique sports-car maker Koenigsegg Group AB agreed to a preliminary deal to buy the troubled company from General Motors Corp. (GMGMQ)
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.
If the deal goes through, Koenigsegg, founded in 1994 by a 22-year-old entrepreneur to make cars for the super-rich, faces the difficult task of reversing years of mounting losses and sales declines at Saab.
Saab, part of GM since 2000, was put up for sale earlier this year as part of the auto maker's efforts to return to profitability. Steady sales declines at Saab accelerated dramatically in recent months, with the brand's future in question.
Just 783 Saab models were sold in the U.S. during May, a fall of 64% and less than the Hummer truck brand being offloaded to Chinese investors. May sales in Europe slumped 66% to 2,191 last month, according to data released Tuesday.
"There are enormous obstacles to overcome" in saving Saab, HIS Global Insight analyst Tim Urquhart's said in a research note Tuesday. "Not least [is] ensuring that the company can limit its cash burn and buy sufficient time and attract funding to underpin a turnaround."
Shareholders in the new company are Koenigsegg, with a 23.4% stake, its owner and Chief Executive Christian von Koeningsegg's firm Alpraaz AB with 42.6%, Norwegian holding company Eker Group with 11.8% and San Diego-based Mark Bishop with 22.2%, according to court documents. Saab's sales price hasn't been disclosed.
Saab was granted creditor protection in Sweden on Feb. 20 and GM said it wanted to offload the unit by the year's end. The sale, expected to close by the end of the third quarter of this year, includes an expected $600-million funding commitment from the European Investment Bank guaranteed by the Swedish government, the companies said in a statement.
Additional financial support is to be provided by GM and Koenigsegg to fund Saab's operations and program investments, including plans to launch several new products that are in the final stages of development, such as the long-awaited revamp of Saab's flagship 9-5 model. As part of the proposed transaction, GM will continue to provide Saab with design and powertrain technology during a defined time period.
The deal comes a day before a Swedish court is expected to approve Saab's proposal to slash its debt to hundreds of creditors. Saab has proposed under the plan to settle its debts by paying 25% of around $1.34 billion owed to more than 600 creditors, including auto suppliers and the Swedish government. The vast majority of the debt is owed to GM.
Saab spokeswoman Gunilla Gustavs said Tuesday that GM's tentative agreement with Koenigsegg doesn't change the outlook for Wednesday's court case.
Meantime, haggling continued over GM's Adam Opel GmbH European unit. Fiat SpA (FIATY) is still vying for Opel after the German government chose Magna International Inc.'s (MGA) consortium over Fiat's offer and pledged to provide bridge financing to keep the company afloat.
-Wall Street Journal
Koenigsegg in process to buy SAAB
...oh yes and awd.
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