Chicken and Koenigsegg

June 15, 2009

I received something of a flaming at the hands of some readers for making a few gentle digs at the presumptions of Koenigsegg – a tiny Swedish sports car maker that is trying to buy Saab from General Motors. In particular, I was chided for not having done my homework before pronouncing – the implication being that I was too lazy to uncover the vast host of facts lying around out there in the public domain that would reveal even to a total dunderhead the merits and sense of this transaction.

Well, it would certainly have made for a shorter post had I stuck to these “facts”.

Here for the record are the public facts that I was able to uncover: Koenigsegg has not denied that it is interested in buying Saab. Er, that’s pretty much it.

What about the mystery backers for the bid? They’ve never been identified. Koenigsegg’s 49 percent shareholder, a Norwegian entrepreneur called Baard Eker, has told the media that he is tired of all the speculation and that he isn’t going to say anything until there is – or isn’t – a deal. He is apparently tired of being phoned up about it because his wife has just had a baby. Koenigsegg don’t even seem to have any bankers.

So facts are thin on the ground.

That’s not to say that the deal won’t happen. Indeed it does seem that GM is pretty hopeful about signing a memorandum of understanding in the very near future. The financial gap is yawningly huge. Koenigsegg had sales of 106 million Swedish crowns last year ($13.8 million) while Saab expects (according to its bankruptcy petition) to make a loss of about 3 billion Swedish crowns ($390 million) this year. But it may be bridged in several ways. First, GM will probably keep a stake and write down its 9.7 billion Swedish crowns of loans to Saab. Second, Koenigsegg will only buy the Saab’s production lines at Trollhattan (part of Saab’s output is produced at other Opel plants) so that will reduce the restructuring that is necessary. And, yup, the EIB and the Swedish goverment will chip in with loans and guarantees.

But that still leaves the magic ingredient that is required to get the whole show off the ground. Apparently that comes from a pair of mega rich individuals who bought Koenigsegg cars and so liked them that, um, they are buying another company. They are putting in enough cash to finance Koenigsegg’s business plan. These people are so stinking rich that they don’t need bankers to act for them; they just write out a pair of very fat cheques.

A cynic might say this reminded them of John De Lorean , whose ill-fated 1980s venture building gull-winged supercars in Northern Ireland was backed by US celebs like Johnny Carson. That came to a sticky end, even though the British government chipped in lots of lolly. But I’ve shaken off my cynicism as far as this one is concerned. I just want Koenigsegg and GM to sign the deal so we can find out who these mystery benefactors are.


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