GM agrees to sell Swedish unit Saab to sports-car firm Koenigsegg

"General Motors Corp. and Koenigsegg Group AB, a consortium led by Koenigsegg Automotive AB, today confirmed the details of a memorandum of understanding for the purchase of Saab Automobile AB that secures Saabs future," GM said.

It said the deal would "secure Saabs future."

GM, now in bankruptcy protection in the United States, put Saab up for sale in February as it bids to slim down its range of brands and become profitable again.

The Swedish company has been undergoing a legal reorganization process since February 20.

Koenigsegg, founded in 1994 by Swedish businessman Christian von Koenigsegg, has just 45 employees and produces 18 high-end sports cars a year for more than a million euros (1.4 million dollars) each.

"Koenigsegg Groups unique combination of innovation, entrepreneurial spirit and financial strength, combined with Koenigseggs proven ability to create world-class Swedish performance cars in a highly efficient manner, made it the right choice for Saab as well as General Motors," GM Europe President Carl-Peter Forster said in a statement.

"Closing this deal represents the best chance for Saab to emerge a stronger company," he said.

The sale is expected to be completed by the end of the third quarter.

The financial details of the deal were not disclosed, but GM said it included an expected 600 million dollar funding commitment from the European Investment Bank, guaranteed by the Swedish government.

"Additional support is to be provided by GM and Koenigsegg Group to fund Saabs operations and product program investments," GM said.

Saab sold 93,000 cars worldwide in 2008.

It owes 9.7 billion kronor (1.3 billion dollars, 924 million euros) to GM -- its largest individual creditor -- as well as 347 million kronor to the Swedish government. Other creditors are owed 647 million kronor.

Saab employs about 3,400 people in Sweden, and about 12,000 other jobs in the country are dependent on it through suppliers.

GM said it would continue to provide technology to Saab during a "defined time period," and added that Saab would produce the next generation of 9-5 models in Trollhaettan in southwestern Sweden where the company is based.

Commentators in Sweden have questioned whether Koenigsegg has the financial muscle or industrial know-how to run Saab.

Koenigsegg is backed by a Norwegian financial tycoon, Baard Eker, whose holding company Eker Group holds a 49 percent stake in the sports car maker.

Eker told Norwegian media at the weekend that "several investors" were backing his bid to buy Saab, but would not disclose their names.

Sweden’s government had in recent months refused to follow Washington’s lead in bailing out its automakers Saab and Ford-owned Volvo Cars over fears the money would end up in the pockets of the US parent companies.

Swedish Enterprise Minister Maud Olofsson welcomed Tuesday’s news, saying it put an end to months of uncertainty about Saabs future.

"It is good that Saabs ownership issue is now settled. This is an announcement that the company’s employees, Trollhaettan, the Vaestra Goetaland region and the government have all been waiting for," she said in a statement.

The head of the IF Metall metal workers union, Stefan Loefven, said meanwhile the deal was "clearly a different ownership solution."

"But perhaps that is just what is needed to exploit the hidden values within Saab. We have all along said that we want to see an owner who wants to and who can develop Saab and its operations in Sweden with research and development as well as production," he added.

GM bought 50 percent of Saab Automobile from Saab-Scania in 1990, snapping up the rest of the company a decade later.

The car unit posted a 2008 net loss of 3.0 billion kronor (241 million euros, 341 million dollars at the time), as sales dwindled due to an ageing product line and a collapse in demand as credit lines tightened.

It last made a profit in 2001, the only year it was in the black in almost two decades of GM ownership.