A little Saab EIB loan insight
June 27, 2009 in Archive
ctm spotted this article in today’s Allt Om Motor and was kind enough to send through a translation. Great photo of JAJ there, too.
There’s not much new here, but it’s good contextual stuff. Basically it’s the same “we haven’t heard enough” from the government that the press has been reporting for around a week now. There’s also a little bit dirctly from the EIB to make it more interesting.
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Green light for Saab’s plan: safer and greener cars
Saab’s future business plan may be approved by the European Investment Bank. But the Swedish car manufacturer may never receive the vital loan without government backing.
- “A condition for disbursement of money is adequate security,” says Mats Gunnarsson, adviser at the bank.
The current rescue plan for the ailing Swedish carmaker Saab Automobile is based largely on a loan of 600 million U.S. dollars from the European Investment Bank, EIB.
The bank, owned by the EU countries, provides loans that are of interest for Europe and meet certain criteria, such as certain environmental objectives. It looks like Saab Automobile will be able to pass the first eye of the needle.
- “We have their business plan and what Saab intends to do is to invest in safer and more fuel efficient cars and that is something we in principle can finance,” says Mats Gunnarsson.
EIB has so far not taken any formal decision to evaluate a loan to Saab, but according to Mats Gunnarsson such a decision [can] be made quickly. Then the new owners Koenigsegg Group with Swedish, Norwegian and U.S. stakeholders will scrutinized.
- “We want to ensure that the money goes to an investment that has a future,” says Mats Gunnarsson.
EIB will also make a credit rating of the company, and they have previously made it clear that with Saab’s poor financial situation they requires additional collateral. In this case, it is in practice about state guarantees.
The Government has asked The National Debt Office to negotiate with Saab about the terms of the guarantees. But EIB intends to keep away from that process.
- “We do not want to be involved in the negotiations,” says Mats Gunnarsson.
If all goes without a hitch – Saab gets a government guarantee and EIB approves the loan – the car manufacturer can expect some favorable terms. Amortization free loan with a maturity of 7-10 years and a better interest rate than a loan taken on the open market.
The EIB has the highest credit rating and can borrow capital to good condition.
- “The loan will match the investment’s economic life, and in the automotive industry that means about seven to ten years,” says Mats Gunnarsson.
Not earlier than September 22, when EIB has its next board meeting, can there be go-ahead for a loan.
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As an aside, and not related to the above, I know we’ve got a few Googlers here who like to keep abreast of the news. For what it’s worth, keep in mind that the one quote is often used to fuel between 5 and 10 different stories. It looks like a lot, when it’s just the same bunch of words in different clothes.
There’s also a bucketload of story recycling. I’m still getting stories on my feed reader, posed as new stories, about how GM are down to two or three bidders for Saab.
