Koenigsegg Group may not get full EIB loans
September 30, 2009 in News
When Bard Eker let slip some comments earlier this week, it sounded like there was trouble because of some backroom dealings involving Mark Bishop and a cast of other shady characters.
Eker claimed he was mis-quoted and we covered the topic extensively here at SU, but maybe the urgency of his concerns was more related to this issue of EIB loans.
First reported in DI.se and covered also by Reuters, we learn the following:
Ailing Swedish car firm Saab, being sold by General Motors [GM.UL], may not get the full 4.3 billion Swedish crown ($612 million) loan it has asked for from the European investment Bank (EIB), daily Dagens Industri wrote on Tuesday, quoting an unnamed source.
The loan is key to plans by luxury car maker Koenigsegg to buy Saab, but the EIB is doubtful whether some of the group’s projects to develop environmentally friendly technology are within its remit for lending. The EIB could lend Saab much less than the car maker wants, the paper wrote.
“There are questions about whether a number of development projects fit with the EIB’s rules for lending,” the paper quoted a source with insight into the process saying.
As you know, these EIB funds are crucial to this deal going through. Koenigsegg Group signed a share purchase agreement with General Motors to purchase Saab but one of the conditions attached to that agreement with the successful application for this loan.
What happens to the deal if the amount is reduced is a question I’m a little fearful of contemplating at this point in time. It’d be difficult for the deal to proceed and with a GM deadline of December 31 hanging over Saab’s head, well, things wouldn’t look good.
Even if Koenigsegg get the loan guarantees and the loan that they’re after, it could be some time before the funds come through.
From SvD and translated by ctm:
Since Koenigsegg Group submitted its loan application for 400 million euros, the European Investment Bank, EIB, has worked on evaluating it. In about three weeks time, on October 21, the EIB will make a decision – yes or no. But this applies only at further detailed negotiations. This means that Koenigsegg Group and Saab may have to wait for the money until next year.
- “The Board may, in October, give its approval for a continuation of detailed negotiations on financial contracts, but I can not say how long it takes before any money can be paid out. It can take months,” says Eva Srejber, Vice President at the EIB.
And then there’s the ever-present Joran Hagglund from the Ministry of Industry:
According to Jöran Hägglund, the business plan has been stress tested on several occasions, which means testing it under different economic conditions. But he would not respond to what stress tests have shown so far.
The EIB demands that any loan will contribute to better environmental technologies and road safety. Currently, the EIB looks at the business plan and makes a thorough review. The government believes it is important that Saab can be competitive in a number of markets in order to guarantee the loan.
- “Our starting-point is that we will be finished with our work and make an agreement with Koenigsegg [Group] before the bank makes its decision three weeks from now.”
Christian von Koenigsegg remained cautiously positive yesterday, saying that talks remain positive on acquiring the loans and guarantees, and that their plan is still to finalise the deal by the end of October.
When it’s reporters talking amongst themselves and theorising, I don’t mind taking them on and trying to maintain some perspective and positivity. But the amount of smoke emanating from Sweden right now would tend to indicate that they are treading a very fine line.