Swedish Automobile details Saab sale deal; Still no binding agreements

By Caroline Salls

Pittsburgh, Nov. 14 - Swedish Automobile NV (Swan) entered into a memorandum of understanding on Oct. 28 with Zhejiang Youngman Lotus Automobile Co., Ltd. and Pang Da Automobile Trade Co., Ltd. for the €100 million sale to Youngman and Pang Da of the shares that Swan holds in Saab Automobile AB and Saab Great Britain Ltd., according to a Swan news release.

Swan said €50 million of the sale price will be paid upon completion of the sale, and four installments of €12.5 million will be paid on the first, second, third and fourth anniversaries of the completion of the sale.

Final agreement between the parties is subject to a definitive share purchase agreement.

The transaction will also be subject to approval of the Swedish Government, the European Investment Bank, General Motors, the National Development and Reform Committee of the People`s Republic of China, the shareholders of Swan and several other organizations.

Saab sale terms

Under the agreement in principle, any outstanding intragroup loans and other financial obligations between Swan and Saab and its subsidiaries will be set off or written off in accordance with applicable law without any actual payment being due and payable.

All of Swan's Saab-related obligations would also be discharged under the draft share purchase agreement.

According to the release, the memorandum of understanding is valid until Nov. 15, and its validity is also contingent on Saab remaining in reorganization.

Swan said the parties are in discussion about the share purchase agreement.

GM roadblock

GM publicly indicated last week that it will not agree to the continuation of the existing technology licenses or the continued supply of 9-4X vehicles to Saab following the proposed change in ownership of the Saab Auto Group.

As previously reported, Swan and Saab are in talks with GM.

Without the GM consent, Swan said it is not certain whether the parties are in the position to sign the share purchase agreement before Nov. 15.

Spyker business sale

In addition, Swan said it is in talks with North Street Capital, LP about the proposed €32 million sale of its Spyker sportscar business and definitive documentation.

Swan said the exact use of the €132 million of net cash proceeds it would receive for the planned sale of the Saab Auto Group and the Spyker business depends on negotiations with different Swan stakeholders.

However, Swan said the proceeds will now allow it to meet its debts in full.

Swan future outlook

Swan said its future will depend on the outcome of the negotiations with Pang Da and Youngman and North Street.

If Swan is not able to complete a sale of the Saab Auto Group or secure further financing for that group, its management will likely not be able to safeguard the group's continuity, which will have negative financial implications for Swan and its stakeholders and may result in the bankruptcy of the Saab Group, the release said.

However, if it is not able to complete a sale of the Spyker business, Swan said it may continue the Spyker business, provided that the necessary funding can be obtained.

If both businesses are sold, Swan said it will consider all of its options, including a voluntary liquidation of Swan.

Swan said the fact that required approvals have not yet been secured and there are no final binding purchase agreements in place lends uncertainty to completion of the transactions and the future of Swan.

Swan said it expects to have a total of €136.5 million of debt as of Dec. 31.

Saab is a Trollhattan, Sweden-based car manufacturer.

Swedish Automobile is based in Zeewolde, the Netherlands.

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