Sweden settles Saab’s €217 million EIB loan after bankruptcy
The Swedish Debt Office has repaid the European Investment Bank loan guaranteed for Saab, taking on SEK 2.2 billion in debt and shares in Saab’s parts and tools units as collateral.
Sweden’s National Debt Office has repaid the European Investment Bank for loans granted to Saab, after the carmaker’s bankruptcy triggered the state’s guarantee. The payment, confirmed by the Debt Office on Friday, covers nearly SEK 2.2 billion (around $325 million), making the Swedish government Saab’s largest creditor as of January 2012.
Saab originally secured a €400 million loan from the EIB, backed by a Swedish state guarantee. Of this, the company drew €217 million before financial collapse forced it to halt production in early 2011. The bankruptcy, declared in December 2011, left the state responsible for the outstanding debt under the guarantee terms.
State becomes main creditor with collateral in parts and tools
As collateral for the guarantee, the Debt Office has taken shares in Saab Automobile Parts and Saab Automobile Tools. According to the agency, the value of these assets exceeds the amount paid to the EIB, though the eventual realisation will depend on the bankruptcy proceedings and asset sales. The government’s position as main creditor gives it considerable influence over the outcome of the bankruptcy process, including any potential sale of Saab’s remaining assets.
The Swedish government has indicated a preference for selling Saab as a whole rather than breaking up the company. The original EIB loan terms gave both the Swedish state and the EIB a veto over changes in ownership, a provision that continues to shape negotiations with interested parties.
Chinese and other bidders circle Saab assets
Interest in Saab’s assets has persisted since the bankruptcy announcement. According to sources cited by Reuters, Chinese group Zhejiang Youngman Lotus was preparing a bid for the company in late January 2012. Other potential buyers, including Mahindra of India and Turkish interests, have also been reported as considering offers for parts or the whole business.
- Zhejiang Youngman Lotus (China) reportedly preparing a bid.
- Mahindra (India) and Turkish government-linked interests have shown interest.
- Volvo and other Swedish companies have targeted Saab’s test equipment and engineering staff.
Saab’s shutdown in early 2011 left suppliers and workers unpaid, and the bankruptcy process has involved efforts to extract value from remaining assets. The fate of unregistered Saab vehicles and the future of the parts business remain unresolved. For further developments on asset disposals, see Saab Prepares to Crush 100 Unregistered Cars as Bankruptcy Fallout Continues.
What it means for workers and suppliers
With the state now the main creditor, the focus shifts to maximising returns from Saab’s remaining assets. The value of the parts and tools businesses, and the interest from international buyers, will determine how much is recovered for creditors, including former employees and suppliers still owed money. The government’s preference for a whole-company sale may help preserve more jobs and industrial know-how, but as of early 2012, no deal had been finalised.
