At the start of 2010, the Debt Office issued a government guarantee to the European Investment Bank for a project loan to Saab Automobile AB (Saab). When Saab declared bankruptcy in December 2011, the Debt Office fulfilled its guarantee commitment and paid the loan. As a result, a claim of approximately SEK 2.1 billion was made on the Saab bankruptcy estate.
As collateral for the guarantee, Saab had pledged its shares in its subsidiaries Saab Automobile Parts AB (Parts) and Saab Automobile Tools AB (Tools). The Debt Office chose not to immediately realise the pledged assets, but instead gave the official receivers the opportunity to sell the entire Saab group to a single buyer.
In June 2012, the official receivers came to an agreement to sell the majority of the assets in the bankrupt companies Saab, Tools and Saab Automobile Powertrain AB to National Electric Vehicle Sweden AB (Nevs). The spare parts manufacturer Parts was not included in the sale.
The central government is assuming ownership of the Saab Automobile Parts
In December 2012, the Debt Office assumed ownership of Parts in order to safeguard the value of its claim. The Government then decided that the shares would be transferred to the unit for central government administration at the Ministry of Finance.
The revenues from a future sale of Parts and any dividends from the company will go to an interest-bearing account held by the Debt Office, where charges and other income from guarantees are placed to cover future losses.
History of the guarantee for Saab’s EIB loan
In conjunction with the global financial crisis of 2008, the European Investment Bank (EIB) was given increased possibilities to contribute funding to the European automotive industry. This meant that the bank’s lending agreement for the transition to green technology was expanded. The EIB was to offer loans to car manufacturers and suppliers, especially for the development of technology to improve safety and performance.
Negotiations on a guarantee for an EIB loan are initiated
On 11 June 2009, the Government tasked the Debt Office with preparing and initiating negotiations with Saab Automobile AB (Saab) and others regarding the issuance of a guarantee for a project loan from the EIB.
In the same month, the company’s then owner, General Motors (GM), issued a letter of intent to sell Saab to Koenigsegg Group (Koenigsegg).
The Debt Office negotiated the terms of a guarantee with Saab, Koenigsegg, GM, the EIB and others on the basis of the Government’s guidelines for this assignment. The negotiations concerned the guarantee itself as well as the associated agreements. The Debt Office analysed Saab’s business plan and valued the assets that constituted collateral for the guarantee.
At the end of November 2009, Koenigsegg announced that it did not intend to carry out the acquisition of Saab. Shortly thereafter, the negotiations regarding the guarantee were resumed as GM had indicated Spyker Cars (Spyker) could be a new potential buyer for Saab.
On 18 December 2009, GM announced that it had been unable to finalise the sale to Spyker and that Saab would instead be liquidated. However, GM remained open to new bids during the liquidation.
The Debt Office’s commission to issue the guarantee
Since GM remained willing to accept offers for Saab, the Debt Office continued working on establishing the terms of a possible guarantee.
The Debt Office submitted its final report regarding Saab to the Government on 13 January 2010. This report contained agreement proposals, an analysis of Saab’s business plan as well as a valuation of the collateral.
Less than two weeks later, GM provided new information that the company had reached an agreement to sell Saab to what was then Spyker.
Guarantee agreement concluded with the EIB
On 26 January 2010, the Government commissioned the Debt Office to, among other things, conclude the agreement negotiations with Saab. One condition for the guarantee was that the final negotiations would not entail an increased risk to the central government compared with the previously presented agreements.
The agreements between the Debt Office and Saab contained provisions regarding the issuance of guarantees for loan disbursements from the EIB, guarantee fees, Saab’s undertaking and terms for the management of the collateral pledged by Saab.
On 12 February 2010, the Government approved the Debt Office’s proposed guarantee agreement with the EIB.
The Debt Office submitted a supplementary report to the Government, which noted, among other things, that adequate collateral was available at the time of the decision. The collateral was structured into three specific subsidiaries of Saab:
- Saab Automobile Property AB (Property), in which the property in Trollhättan was included
- Saab Automobile Parts AB (Parts), to which the spare parts operation was transferred
- Saab Automobile Tools AB (Tools), which took over Saab’s tools.
All in all, the Debt Office made the assessment that the business plan that provided the basis for repayment of the guaranteed loan had been produced in a reasonable fashion, that the ownership was sound and that the terms of the guarantee corresponded to the central government’s need for rights and control.
On the same day, the EIB announced its final approval of the loan of up to EUR 400 million.
The sale of Saab is concluded and the EIB starts disbursing the loan
On 23 February 2010, the sale of Saab to Spyker, which later changed its name to Swedish Automobile, was finalised. On the same day, the Debt Office, Saab and the EIB concluded the guarantee agreement and their other agreements. The loan was then disbursed – and guaranteed – in instalments according to a predetermined schedule.
In conjunction with each instalment, the EIB checked that the projects that the loan would be financing were implemented according to plan and that the company was providing the funds for at least 50 per cent of the project costs. In connection with each guarantee, the Debt Office verified that Saab fulfilled the terms of the agreements concluded with the company.
Loan commitment and property deal
In April 2011, Saab requested permission to sell the company Property, which at the time was pledged to the Debt Office as collateral. This would allow Saab to raise capital and improve its liquidity. The Debt Office consented to the sale, on the condition, among others, that the loan commitment was reduced.
In July 2011, 51 per cent of Property was sold to a consortium led by the property company Hemfosa. The deal was approved by the Debt Office, the Government and the EIB. In conjunction with the sale, the Debt Office released the pledged collateral in Property and the guarantee commitment was reduced.
The new guarantee commitment was set to EUR 280 million. The Debt Office had issued guarantees equivalent to EUR 217 million, and the EIB had made loan disbursements in the same amount. The Debt Office’s assessment was that the central government had adequate collateral for the guarantees, even without the pledged assets in the property company.
In accordance with the agreements entered into by Saab, the Debt Office, the Government and the EIB needed to approve any new owners with holdings of 10 per cent or more in Saab or its parent company Swedish Automobile.
At one point, it was for example necessary to assess Vladimir Antonov as a potential new owner in Swedish Automobile. The Debt Office conducted an ownership assessment, which it reported to the Government. In its report of April 2011, the Debt Office noted that there were no grounds to refuse Antonov as a new owner. Neither the Government nor the EIB made a decision in this matter.
The Debt Office also initiated an ownership assessment of the Chinese companies Pang Da Automobile Trade and Youngman Automotive, but these assessments were never completed. In order for these companies to become owners of Saab, approval was needed from the Debt Office, the Government and the EIB as well as from Chinese government authorities. These assessments were also never completed.
Saab Automobile is declared bankrupt
Saab was declared bankrupt by Vänersborg District Court on Monday, 19 December 2011. It was the company itself that filed for bankruptcy. The subsidiaries Saab Automobile Powertrain AB (Powertrain) and Tools were also declared bankrupt.
The spare parts company Parts was not.
The Debt Office pays off Saab’s loans
In its capacity as guarantor, the Debt Office paid off Saab’s loan with the EIB at the end of December 2011, which resulted in a claim of approximately SEK 2.1 billion on the Saab bankruptcy estate. This made the Debt Office the main creditor in the bankruptcy. As collateral, the Debt Office had pledged shares in Parts and Tools.
The Debt Office chose not to immediately realise the pledged assets, but instead gave the official receivers the opportunity to sell Saab along with its subsidiaries to a buyer.
Acquisition by Nevs
In June 2012, the official receivers came to an agreement to sell the majority of the assets in the bankrupt companies Saab, Tools and Powertrain to National Electric Vehicle Sweden AB (Nevs). The shares in Parts were not included in the sale to Nevs.
The central government assumes ownership of Parts
On 18 December 2012, the Debt Office assumed ownership of Parts by claiming its shares and thereby protecting the value of the central government’s claim.
Ownership is transferred to the Ministry of Finance
At the end of January 2013, the Government decided that management of the shares in Parts would be transferred to the central government administration unit at the Ministry of Finance.
All dividends from Parts, which is now called Orio AB, and the purchase sum from any future sale of that company will go to the Debt Office’s guarantee reserve. The guarantee reserve consists of funds in an interest-bearing account where charges are deposited, which are used to cover losses in the guarantee operations.