Automaker General Motors Co., now known as Motors Liquidation Co. (MTLQQ.PK), which emerged from bankruptcy in July, said Tuesday that the Koenigsegg Group AB terminated the agreement to buy its Swedish SAAB brand.
Commenting on the termination of the deal, GM President and Chief Executive Officer, Fritz Henderson said, "We're obviously very disappointed with the decision to pull out of the SAAB purchase. Many have worked tirelessly over the past several months to create a sustainable plan for the future of Saab by selling the brand and its manufacturing interests to Koenigsegg Group AB."
GM further noted that given the sudden change in direction, it will take next several days to assess the situation and will advise on the next steps next week.
GM was looking forward to close the deal with the Koeningsegg Group AB, a consortium led by Koenigsegg Automotive AB by the end of the third quarter. The proposed plan included a US$ 600 million funding commitment from European Investment Bank guaranteed by the Swedish government. Saab has filed for reorganization under the Swedish law on February 20, 2009.
On September 9, Koenigsegg Group signed a Memorandum of Understanding with Beijing Automotive Industry Holdings Co. Ltd., or BAIC, to explore growth opportunities in the Chinese and international markets for the products of SAAB Automobile and BAIC. BAIC joined Koenigsegg Group's offer to buy Saab Automobile from GM to propel model development and sales growth.
Under the terms of the MOU, BAIC would have become a non-controlling minority shareholder in Koenigsegg Group. Koenigsegg Group would have owned 100% of SAAB Automobile AB. The intention was to conclude an agreement later this year.
The Detroit, Michigan-based car maker GM had purchased SAAB in a two-part transaction. The first half of the transaction was completed in 1990, while the other half was completed in 2000. GM has been looking for a bidder for its Saab unit since February 2009, when Saab filed for bankruptcy.
In June, SAAB's creditors approved its proposal to pay 25% of about 10.5 billion Swedish Kronor, or US$ 1.46 billion in debts, including almost 10 billion Swedish Kronor owed by the unit to parent GM, and the remaining to auto suppliers and the Swedish government.
On November 3, GM abandoned the sale of German Unit Adam Opel GmbH and British sister brand Vauxhall, citing the improving business environment as well as the brands importance to GM's global strategy. Instead the company reportedly planed to raise about US$ 4 billion from the U.S. and other European governments, including the UK and Spain, as an alternative to selling the units.
Earlier in October, GM signed a definitive agreement with China-based privately owned engineering company, Sichuan Tengzhong Heavy Industrial Machinery Co., Ltd., to sell its premium brand Hummer. Though financial terms of the deal were not disclosed, media reports suggest that GM agreed to sell Hummer to Tengzhong for US$150 million. GM had earlier valued the division at about $500 million.
GM posted 4.1% growth in its sales for October, which was its first year-over-year gain since January 2008. GM's September sales had plunged 45%, and August sales dropped 20%.
Statistics show that GM sold 513 SAABs in the month of October, and 7,441 SAABs in the previous year, representing about 62% decline compared to the year-ago period.
MTLQQ.PK is currently trading at $0.6560, down $0.0130 or 1.94% on a volume of 1.02 million shares.
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