STOCKHOLM, June 8 Sweden is likely to take over bankrupt carmaker Saab's spare parts unit, the country's Debt Office said on Friday, a potential embarrassment for a centre-right government focused on privatising state assets.
The carmaker was declared insolvent at the end of 2011 with debts of around 13 billion Swedish crowns ($1.8 billion), around 2.2 billion of which is owed to the Debt Office itself.
Although receivers have been trying to sell Saab's assets, it looks like a buyer can't be found who is willing to pay enough to cover the company's debt to the Debt Office, which holds shares in Saab units Saab Automobile Parts and Saab Automobile Tools.
Debt Office head Bo Lundgren said a sale of Saab as a whole was still the best solution and that Saab Tools was likely to be part of any deal. But he said the government is ready to run Saab Automobile Parts to ensure taxpayers recoup their money if the unit can't be sold at the right price.
"If there isn't a sale of the whole concern ... we are going to take over Saab Parts," Lundgren said.
The Debt Office took shares in Saab Automobile Parts - a daughter company to Saab Automobile - and Saab Tools as collateral for guaranteeing a loan from the European Investment Bank to Saab Automobile.
Early this year, the Debt Office paid off the EIB saying the collateral was worth more than the loan.
Lundgren said the Debt Office now reckoned it could get taxpayers' money back from the sale of shares in Saab Tools and from profits from Saab Parts over the coming seven or eight years.
"Hopefully, we can sell (Saab Parts) after a couple of years to someone who understands the future value," he said.
Taking over Saab Parts would be an about-face for the government, which said when Saab got into trouble that it did not want to run a car company.
Furthermore, the centre-right government has been busy selling off state assets, disposing of Absolut Vodka maker Vin & Sprit and reducing stakes in banking group Nordea and telecom operator TeliaSonera.
The four party alliance had plans to further cut state ownership, but lost its majority in an election in 2010. The economic downturn has also made it difficult to get a good price for assets.
The Debt Office issued loan guarantee in February 2010 to help Saab restructure. The original guarantee was for loans up to 400 million euros ($502.5 million), but this was later reduced to 280 million of which Saab used 217 million.
The loans were to finance projects to develop environmentally sound technology. ($1 = 7.1603 Swedish crowns) ($1 = 0.7960 euros) (Reporting by Simon Johnson; Editing by David Holmes)