Swedish carmaker Saab secured a key court ruling on Wednesday to cut billions of crowns in debt, paving the way for its proposed takeover by local sportscar maker Koenigsegg.
The ruling came after owner General Motors, Saab's biggest creditor, said on Tuesday it had struck a preliminary deal to sell Saab Automobile to Koenigsegg.
The court in Vanersborg, close to Saab's headquarters in southwest Sweden, approved the 75 percent writedown of Saab's more than 10 billion Swedish crowns ($1.28 billion) of debt after a vast majority of creditors gave the green light to the proposal earlier on Wednesday.
Saab filed for protection from creditors in February after its now bankrupt U.S. parent, to whom Saab owes most of its debt, said it would cut ties to the brand by the year-end.
Saab's chief executive Jan Ake Jonsson told a news conference after the court hearing the company had sufficient funds for it to complete the restructuring of its business and praised its much smaller prospective new owner.
The deal between the two carmakers, which is expected to close in the third quarter, is one of the most unlikely in automotive history -- Koenigsegg made 18 cars last year, Saab more than 93,000.
Koenigsegg has an incredible cutting edge know-how in several areas while Saab has a lot of cutting edge know-how in other areas, Jonsson said.
While Saab has made a name building safe and sturdy saloons, Koenigsegg appeals to customers who are willing to spend around $1 million on a car that is capable of speeds of more than 395 kilometers (245 miles) an hour.
BUSINESS PLANS STAND
Saab hopes a concentration of production and the launch of new models will boost capacity utilization at the carmaker, while cost cuts are seen lowering its breakeven level to an annual production rate of 130,000 vehicles.
But the company has forecast volumes will fall both this year and the next from the 93,000 units manufactured in 2008, though it has said it sees a positive cash flow in 2011.
The new group that we have written an MOU (memorandum of understanding) with intends to carry out the business plan we have been working on for quite some time, Jansson said.
It is based on continuing along the road we've taken by readying the new models we pretty much have completed. We'll continue strengthening our brand and continue efforts to boost efficiency in order to reach a positive cash flow in the future, he added.
General Motors said the deal included an expected $600 million of loans from the European Investment Bank, guaranteed by the Swedish government. Other terms were not disclosed.
Jonsson said he was optimistic about securing the loan guarantees. Since the government has given the debt office the authorization, I assume that all the work we've done ... will generate a positive result in terms of loans and loan guarantees, he said. Koenigsegg was founded in 1994 by Christian von Koenigsegg. A new company called Koenigsegg Group -- with backing from other investors including Norwegian entrepreneur Bard Eker and U.S. investor Mark Bishop -- has been formed for the takeover.
($1=7.816 Swedish crowns)
(Writing by Veronica Ek; Editing by Greg Mahlich)