The Saab-Spyker Deal Explained

The Saab-Spyker Deal Explained

AMSTERDAM - General Motors Co. said Tuesday it has reached an agreement to sell its struggling Saab Automobile arm to the small Dutch luxury carmaker Spyker Cars NV.

GM has not specified terms of the deal, but a Wall Street Journal report citing anonymous sources says the sale price is roughly $74 million, and GM will retain preferred shares in Saab worth $326 million.

As part of the deal, the Swedish government will guarantee a euro400 million ($566 million) loan from the European Investment Bank to Spyker, the Journal reported.

It's been a long wait and lots of nail biting for Saab employees and Saab enthusiasts around the world, but GM and Spyker have reached a preliminary agreement on a Saab sale. The deal includes amongst other things the rights to the Saab brand of course, the Trollhattan production facilities (which was important to Spyker - more on that in a bit), the rights to produce and sell the existing 9-3's, the new 9-5 and 9-4x models. Former Saab CEO Jan-Ake Jonsson, who was let go when the liqudation of Saab started, will be reinstated as CEO. He, and Spykers CEO Victor Muller have been named the heroes of this deal - Jonsson for his endurance and stamina "He didn't walk out the back-door as liquidation started - instead he started nightly negotiations, writes Aftonbladet.se in a tribute to Jonssons' role. And Spyker's Muller's charm and persistence have also been mentioned as a crucial part in securing Saab from GM.

THE FINANCING

Financing for the Spyker/Saab deal is not entirely known, but Victor Muller have allegedly contributed with private funds to secure the deal. But when di.se asks him, he gets secretive. It's mostly financed through loans, he says, but he refuses to specify sources saying "it's about my own shareholder structure." What is clear is that he buys out the Russian black horse Viktor Antonov, which was a demand from both GM and the Swedish Government. Antonov will own nothinh in the new company, Muller says. But Muller himself will hold a 38% stake in the company. And Abu-Dabi based Mubadala will own 22,4%. The rest of Saab's capital structure will consist of investment funds, each holding less then 5% of Saab's equity. All this according to Muller himself, through di.se

THE DEAL

Under the terms of the deal, the following will take place. 1. Spyker Cars NV in Zeewolde, The Netherlands buys all Saab Automobile AB's shares from GM's subsidiary Saab Automobile Investment AB for US$ 74 million. 2. At Spyker's general meeting later this spring, the Spyker NV*s name will change to Saab Spyker Automobiles NV. Saab will become a Subsidiary of SSA. 3. GM stops Saab's liquidation and Jan Ake Jonsson and the rest of Saab's management is reinstated. 4. Payment to GM will happen in two stages: 50 million upon final contract signing, by Feb.15, and then 24 million by July 15 2010. 5. The contract between GM and Spyker are dependent on the 400m EURO EIB loan. The Swedish government has said they will guarantee the loan, but the EU commission must approve the guarantee, and the EI Bank must grant the loan. 6. GM will partner in the new Saab Spyker for 7 years, by getting interest bearing preference shares worth USD 326 million (with a 1% voting rights). This is in practice a loan from GM to Spyker that is due Dec 31 2016. 7. Victor Muller will, through his privately owned company Tenaci Capital BV, resolve Vladimir Antonov from the deal. Antonov's presence was an issue to GM and Sweden's Gov't.

SPYKER'S PLANS

Jan Ake Jonsson says in an interview with di.se that he reckons Saab will be profitable in 2012, which is when they will have finished the plan's largest investments. Saab must sell 100,000 cars to be profitable, he says. Saab has consistently sold 100.000 cars, regardless of economic changes. "We'll use this estimate even though we have quite a new model program, so these figures could even be a conservative estimate," he tells di.se.