General Motors Co.’s Saab Automobile division moved closer to receiving state backing for its sale to Koenigsegg Group after Sweden sought European Union approval for the terms of a proposed loan guarantee.
The government sent an application on Oct. 2 to the European Commission, the EU’s antitrust regulator, to gain an opinion before deciding whether to support the Saab transaction, Haakan Lind, a spokesman at the Stockholm-based Ministry of Enterprise, Energy and Communications, said today by phone.
Saab’s sale depends in part on the division receiving a $600 million European Investment Bank loan backed by the government. The takeover is also receiving private financing, including 3 billion kronor ($431 million) that became available when Beijing Automotive Industry Holding Co. joined Swedish sports-car maker Koenigsegg Automotive AB’s bidding partnership.
The authorities’ approach to the EU “would suggest that the Swedish government is happy enough to guarantee the loans,” said Mike Tyndall, an auto analyst at Nomura Securities in London. “It’s a step in the right direction, but it doesn’t necessarily mean that the deal goes through or that Saab is guaranteed a bright, happy future.”
Talks are continuing with the Swedish National Debt Office about the guarantee, Eric Geers, a spokesman at Trollhaettan- based Saab, said yesterday, calling the government’s filing with the EU “an important milestone.”
The European Commission oversees whether state aid to companies in the 27-nation EU distorts competition. The EIB, the EU’s lending arm, aims to discuss Saab’s loan application at a board meeting Oct. 21, Eva Srejber, a vice president at the Luxembourg-based bank, said two weeks ago.
“We want the commission to evaluate the conditions that we’re discussing,” Swedish government spokesman Lind said. “Everyone is aware that all this is happening under time pressure.”
Jonathan Todd, a European Commission spokesman in Brussels, declined to comment today, beyond acknowledging that the regulator has received Sweden’s request.
Saab has been unprofitable for most of the 20 years that Detroit-based GM has owned the company. The unit received protection from creditors in February after the U.S. carmaker decided to cut ties while reorganizing worldwide to stem losses.
Consumers’ doubts about Saab’s future contributed to its 58 percent sales plunge in Europe in the first half, the biggest decline among all automakers in the region, according to the European Automobile Manufacturers Association.
The group bidding for Saab is led by Augie Fabela II, an American who co-founded Russian mobile-phone operators OAO VimpelCom. In addition to Koenigsegg Automotive, maker of the $1.2 million CCXR sports car, and Beijing Automotive, China’s fastest-growing carmaker, Norwegian industrial-design entrepreneur Baard Eker is also an investor.
Photo – AP Photos