GM sells Saab to Koenigsegg Automotive

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Koenigsegg CCXR

STOCKHOLM (Reuters) -- General Motors Europe said on Tuesday a preliminary agreement has been reached to sell the company's money-losing Swedish unit Saab to local sportscar maker Koenigsegg.

Koenigsegg, a small firm with just 45 staff that makes only a handful of high performance cars a year, came out of nowhere to emerge as a front-runner to buy Saab.

The deal would see Saab, which was put up for sale earlier this year, emerge from two decades under the umbrella of its U.S. parent which filed for bankruptcy earlier this month.

Sale terms were not disclosed but the agreement includes expected financing to be guaranteed by Sweden.

"The sale, expected to close by the end of the third quarter of this year, includes an expected $600 million funding commitment from the European Investment Bank (EIB) guaranteed by the Swedish government," GM Europe said in a statement on its website.

But the Swedish government, which has been wary of making a commitment on loan guarantees, said the issue of financing support was not yet resolved.

"We do not yet know if Koenigsegg group will need loan guarantees or not," Joran Hagglund, state secretary for Sweden's industry ministry, told Reuters.

Saab Automobile had been in talks with two or three bidders in recent weeks.

Koenigsegg, founded 15 years ago by Christian von Koenigsegg, was until recently seen as an unlikely suitor. Analysts say it's unclear whether Koenigsegg has the expertise to run a larger company such as Saab or whether the two operations make a good fit.

Saab's sales comprised just over 1% of GM (GMGMQ)'s total sales volume last year. It has been hit hard by the economic downturn that has savaged sales on both sides of the Atlantic.

The company, one of Sweden's best-known brands, has said it needs $1 billion of financing to help it overhaul production and launch new models while absorbing expected losses of about $382 million this year.

The Saab Automobile/IF Metal workers' union welcomed the news.

"We're not negative to this. We think it is good that this finally got its solution," union representative Paul Akerlund told Reuters.

The union, and residents of Saab headquarters Trollhattan, in southwest Sweden, have been anxious to see a deal reached as Saab is the town's main employer.