DETROIT - Saab got a new life Tuesday as General Motors Co. agreed to sell the Swedish car brand to the small Dutch luxury carmaker Spyker Cars NV.
Under the deal, GM will get US$74 million in cash plus $326 million worth of preferred shares in Saab. GM will get "other considerations," which it did not specify. The Swedish government is also ready to guarantee a loan of up to four billion kronor ($550 million) from the European Investment Bank, Industry Minister Maud Olofsson said.
The deal is a coup for Spyker and a lifeline for Saab, which has lost money for years under GM's ownership and was slated for liquidation. Saab has around 3,500 employees in Sweden.
But it's also a huge challenge for Spyker, which sold only 23 cars in the first half of 2009, its most recent reporting period, and posted a net loss of 8.7 million euros. The 11-year-old company has yet to make a profit, but it says funding for its operations have been guaranteed through 2010.
Spyker CEO Victor Muller said in a statement that the company is happy to have saved the brand and secured the jobs of thousands of workers.
"Saab is an iconic brand that we are honoured to shepherd," he said in the statement, adding that support from many of the 1.5 million Saab drivers worldwide helped get the deal done.
Saab spokeswoman Gunilla Gustavs said "We are very happy" about the sale.
Under the deal, GM will continue to provide engines and transmissions for the new company for "an extended period of time," and it will keep making the 9-4X crossover vehicle for Saab, said John Smith, GM's vice-president of planning and alliances. Crossovers have the interior room of an SUV but are built on a car instead of a truck frame.
GM hopes to close the deal by mid-February, Smith said.
Spyker will continue to provide vehicles for and support Saab's U.S. dealers, Smith said. The Dutch automaker also will guarantee up to $10 million in Saab's obligations to GMAC, which is GM's financing arm.
Sweden's Olofsson said the government made the decision to back the loan on Tuesday after analysing a review of Spyker's business plan and financial situation by the Swedish National Debt Office and consulting firm KPMG. She said the money must be used for projects to develop environmentally friendly cars in Sweden.
If the European Investment Bank loan is approved it will be paid out in instalments, not as a lump sum, she said.
But she said the biggest challenge remains for Saab: to develop cars that customers want and "deliver a solid profit."
GM has been trying to shed Saab for more than a year as part of a massive restructuring process after it emerged from bankruptcy protection. The company also plans to sell Hummer and will phase out Saturn and Pontiac so it can focus on four brands: Chevrolet, Buick, GMC and Cadillac.
Saab Automobile sold around 90,000 cars in 2008, a 30 per cent decline from 2007. With another sharp sales decline expected, it filed for protection from creditors while it reorganized in February 2009.
Saab's U.S. sales last year amounted to only 8,680, down 59 per cent from 2008 as consumers stayed away from the brand due to uncertainty over its future.
GM filed for bankruptcy itself in June, and previous attempts to sell Saab by a Dec. 31 deadline failed.
To win the bidding process, Spyker had to overcome reservations within GM that it didn't have the expertise to run a car company. Several GM executives were afraid of getting tangled up with the Dutch automaker because GM will at least for a short time have to continue providing vehicles for Saab.
Spyker bested Luxembourg private equity group Genii Capital to win the bidding for Saab. Genii withdrew from the bidding Monday, saying "the timing of the bidding process for Saab is incompatible with implementing a solid business platform for the future."