Wild Ass Rumor of the Day: Koenigsegg Secures GM Financing to Buy Saab From GM
When Christian von Koenigsegg announced he’d cut a deal between Koenigsegg Group (KG) and GM to buy Saab, he also “hinted” that the Swedish government would contribute to the deal. Since then there’s been a lot of speculation about whether KG has access to enough cash to gain control of New GM’s deathbed-dwelling subdivision. At the same time, analysts have wondered if Saab has enough money to keep the lights on until the deal goes down. Saab’s suppliers have demanded clarifications from KG/GM before delivering parts. Yesterday’s reports that Koenigsegg’s partner in their solar-powered EV project ( Swiss company NLV Solar) is facing lawsuits for fraud did nothing to reassure skittish fans of a KG-run Saab. Today’s news offers some respite. According to Industry Daily [via Swedish Wire], Koenigsegg Group has secured enough funds to qualify for a Swedish government-guaranteed loan at the European investment Bank. The source of this much-needed financial infusion? Unnamed sources finger unnamed new investors that include . . . wait for it . . . GM. US taxpayers to the rädda, again?
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So, GM may use US taxpayers money to lend to a Swedish company for them to buy SAAB, presumably because they can't get the financing from anyone else. A couple of questions with this. First, by lending the money aren't GM saying they didn't need the $xx in the first place – or have thing improved for them that much since taking the cash? Second, if Koenigsegg can't get the money commercially, doesn't that say what the "traditional" sources of finance think about the prospects for SAAB? Wouldn't it just be easier (and better PR) if GM sold SAAB for a nominal $10 (as per what BMW did with Rover)? Lokkii - I'm also having trouble with your Step 4.
Maybe they will bring back the three-cylinder two-stroke engine. Twotone
"Traditional" sources of finance are still scarce these days, thanks to the financial crisis. Everyone is having that problem. Also I believe Koenigsegg was a vendor for NLV Solar, not a partner - they built the guts of the NLV concept car on contract. There was some speculation that Saab could take advantage of the solar technology, and that got shot down by Koenigsegg after the Saab deal was announced - and precisely for that reason ("we were hired to build the car only"). The article assumes that GM is putting in cash, but the most likely explanation is that GM is agreeing to forego repayment of more debt owed to it by Saab. The net additional cash outlay to US taxpayers is likely zero. In all likelihood, if the Koenigsegg deal craters it will cost GM more money to clean up the mess than the additional funds (or equivalent in forgiven debt) than it is putting into the deal. This is why GM did the deal in the first place, as opposed to incurring the costs of simply shutting down Saab. GM is behaving rationally in this instance.
mpls hit the nail on the head. GM's part in this is providing Saab with the tools and permissions for the new 9-5. GM has already forgiven a substantial amount of Saab's debt as part of Saab's reorganisation process under Swedish law. There is a report saying GM is plugging the hole in The Local (English language Swedish newspaper) as well, but they've misinterpreted the Reuters news report from today. GM are just part of the equation, as described above. And yes, NGV Solar got design and construction work only out of Koenigsegg. There is a press release on Koenigsegg's website, dated a few months ago, stating unequivocally that they have no ongoing relationship with NGV. Don't let that get in the way of a good wild-ass rumour, though.