GM and Investor AB to Invest in Saab

06/26/96

Reuters reported that General Motors and its Swedish partner Investor AB formally announced a recapitalization plan for their joint property, Saab, the Swedish luxury carmaker. The announcement ended months of speculation about Saab's future.

GM and Investor AB will each invest $262 million in the ailing Saab Auto during the 1996-1997 year. The two companies hope that the infusion of money will help Saab boost its sales by half over the next five years, reversing the Swedish carmakers recently poor performance.

Speculation had focused around the notion that Investor AB had wanted to leave Saab Auto entirely, but GM dismissed the idea by under-scoring the size of the investment that each of Saab's co-owners will put forth. Under the terms of the investment agreement, however, GM has the right to buy all or part of Investor's shares in Saab in the year 1999-2000. If GM has not exercised their option by 2000, Investor has the right to sell up to half of their shares to GM. GM asserted that it was currently happy with its 50/50 ownership of the company.

Paul Dever -- The Auto Channel