GM deal rescues Swedish auto unit

6/17/2009

STOCKHOLM - Saab Automobile, General Motors Corp.'s struggling Swedish unit, was rescued yesterday by a consortium led by Koenigsegg Automotive AB, a tiny company that makes only a dozen custom-made super cars a year.

GM said in a memorandum of understanding that the sale would include an expected $600 million funding commitment from the European Investment Bank, guaranteed by the Swedish government. Additional funding for Saab's operations and investments would be provided by GM and Koenigsegg Group AB, it said.

A person briefed on the deal said GM will get nothing initially for Saab but would be paid $150 million - capital Saab had left over from GM's ownership - in addition to the value of Saab's assets if the new company turns a profit.

The person, who did not want to be identified because the deal has not closed, could not estimate the value of those assets.

GM bought a 50 percent stake in Saab for $600 million in 1990 and acquired the rest for $125 million in 2000. Fritz Henderson, GM's chief executive officer, said GM could build another car for the Saab brand.

The sale is expected to be completed by the end of the third quarter and is subject to regulatory approvals.

"This is yet another significant step in the reinvention of GM and its European operations,"

Carl-Peter Forster, president of GM Europe, said in a statement.

"Closing this deal represents the best chance for Saab to emerge a stronger company," Mr. Forster said, adding: "Koenigsegg Group's unique combination of innovation, entrepreneurial spirit, and financial strength, combined with Koenigsegg's proven ability to create world-class Swedish performance cars in a highly efficient manner, made it the right choice for Saab as well as for General Motors."

The company behind the consortium, Koenigsegg Automotive, was founded in 1994 by Christian von Koenigsegg, a Swedish sports car fanatic and entrepreneur, who remains the chief executive. It makes luxury sports cars at its headquarters, a former air force base near Angelholm, in southern Sweden.

With a full-time staff of 45, Koenigsegg makes around a dozen cars a year, customized for each buyer. The company doesn't advertise prices, but they are believed to range between $1 million to $2.3 million each.

Saab, on the other hand, has more than 4,000 employees worldwide, is represented in some 50 countries, and typically produces more than 100,000 cars a year.

Koenigsegg representatives did not immediately return phone calls seeking comment.

Saab went into creditor protection Feb. 20 in an effort by GM to sell the unit.