SWEDISH AUTOMOBILE GIVES UPDATE ON FINANCIAL AND GENERAL POSITION

ZEEWOLDE, THE NETHERLANDS | March 05, 2012
 
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Swedish Automobile N.V. (Swan) announces today steps it has taken and will take to improve its (financial) position, as well as the Spyker business.

Following the unfortunate bankruptcy of Saab Automobile AB on December 19, 2011, all Swan Supervisory Board members and one of its two Management Board members, Mr. Rob Schuijt, resigned on January 18th, 2012 because of differing views on how to deal with the future of Swan and the Spyker business (Spyker) with Swan's CEO Mr. Victor Muller.

Since January 18th, 2012 the following actions and decisions have been taken with a view to alleviating and improving the serious (financial) position of Swan and Spyker following Saab Automobile's demise.

1. Emergency funding

The first step taken was to seek short-term funding for Swan and Spyker to stave off the imminent threat of a possible bankruptcy by making two draw downs, which were announced on January 18, 2012 and February 8, 2012, under the Euro 150 million GEM Equity Stand-by Facility, which Swan entered into in January 2010. These draw downs generated approximately Euro 1.5 million in immediate funding, which amount was used to pay critical overdues, ongoing operating expenses and to reach agreements with its creditors.

2. Spyker business not to be sold and to remain in Swan

It has been decided to terminate discussions with prospective buyers and to continue the Spyker business as a 100 percent subsidiary of Swan.

The initial decision to sell Spyker was taken in September 2010 and was driven by the desire to focus all financial and management resources on Saab Automobile. However, the sales process with the original buyer, CPP Manufacturing Ltd, was hampered by legal obstacles primarily caused by the rapidly deteriorating situation at Saab Automobile. Subsequent discussions with other prospective buyers were entered into, but these have now been terminated.

With Saab Automobile sadly in bankruptcy, the driver behind the sale of the Spyker business has disappeared with it, and all management resources and funding are now again exclusively focused on the Spyker sports car business, which in Swan's opinion has attractive prospects.

3. Conversion of all Swan loans.

For Swan and Spyker to have a viable future, the  burden of (convertible) loans, which Swan entered into in part to finance the Saab Automobile acquisition, needed to be eliminated and new terms agreed to avoid Swan being in default under those loans. To that end, agreement in principle has been reached between Swan and its lenders.

Subject to execution of definitive transaction documents and certain other conditions (including relevant approval from the Extraordinary General Meeting of Swan's Shareholders (EGMS) to be held on April 17, 2012 (see item 4 below), all outstanding amounts under these loans (including all accrued but unpaid interest), advanced by Tenaci Capital B.V. (Tenaci), Epcote SA (Epcote) and Gemini Investment Fund Ltd. (which loan has been sold and transferred to LAT Management N.V., which is indirectly wholly owned by Mr. Victor Muller) are to be converted into Swan share capital at a share price of Euro 0.50 per share.

It is  currently not  Mr. Victor Muller's intention to, directly or indirectly,  hold a voting stake in Swan at 30% or more such that he would be obliged to make a mandatory public bid for all of Swan's shares; appropriate arrangements (including transfers of shares, if necessary) to this end will be made.

The conversions will be made into non-listed Class A  shares as follows :

Tenaci: principal amount Euro 64.5 million, accrued interest Euro 15.7 million, number of shares Class A to be issued 160.4 million;

LAT Management N.V.: principal amount Euro 30.0 million, accrued interest Euro 2.0 million, number of shares Class A to be issued 64.0 million;

Epcote: principal amount Euro 18.2 million, accrued interest Euro 4.6 million, number of shares Class A to be issued 45.6 million.

Total number of shares Class A to be issued: 270.0 million.

After the above conversions SWAN and Spyker will free from (bank) loans with the exception of a financial lease agreement for Spyker C8 Aileron tooling of which the residual amount is  Euro 2.0 million.  Moreover it is assumed SWAN will return to a positive equity position effective April 17th, 2012.

4. Amendment of Swan's Articles of Association to increase share capital and change name

So as to allow for the loans-to-shares conversions as described above, the authorised share capital of Swan shall have to be increased from 75 million shares currently to 500 million shares. Additionally the name of Swan is proposed to be changed to 'Spyker N.V.'.

To effect these amendments , Swan will call for an EGMS to be held on April 17, 2012. The convocation and details are put on the website of Swan (www.swedish-automobile.nl) on 6 April 2012 under the heading "Investors".

5. Proposed appointment of supervisory board member / chairman

At the EGMS, a proposal to appoint Mr. Martin E. Button of San Francisco, California, USA, as sole member and Chairman of Swan's Supervisory Board will be tabled.

6. Agreement reached with certain Swan creditors

So as to further reduce Swan's cash requirements, Swan has reached important agreements with various creditors some of which, such as GMAC, are related directly to Swan's involvement in Saab Automobile:

At the time of, and in connection with, the acquisition of Saab Automobile, Swan granted a US$ 10 million parent company guarantee to Saab Automobile's financier GMAC. In an agreement reached on 2 March 2012, that exposure has been reduced to $ 1 million to be placed in escrow for the duration of GMAC's recovery process, which may take up to several years.

It is expected that additional agreements with certain creditors will be reached shortly.

7. Agreement with CPP (Manufacturing) Ltd. in Administration (CPP)

Unfortunately on January 10, 2012, Spyker's Tier One supplier of its aluminium bodies-in-white, CPP, went into administration. Spyker has reached agreement on 2 March 2012 with the administrators to buy certain tools, work in progress and (body) parts for its Spyker C8 Aileron production.  

As a result of the situation which arose due to CPP's administration it has been decided to assemble Spyker C8 Ailerons in the Works facility in Zeewolde, Netherlands (where the production of Spyker's C8 Spyders and Laviolettes continued in the past two years) rather than in the UK.

8. Swan has reached agreement in principle to issue a Euro 10 million Convertible Debenture to GEM of New York, NY, USA (GEM) to finance its short term funding

Today Swan signed a term sheet for the issue of in aggregate Euro 9.99 million Convertible Debentures to GEM. The issue of the convertible debentures is subject to execution of definitive transaction documents and the approval of Swan's supervisory board, once appointed on April 17th,2012. The key terms and conditions of the convertible debentures will include the following:

An initial convertible debenture of EUR 1 million, followed by four further convertible debentures. The issue of each of the four further convertible debentures is contingent on the volume weighted average price (VWAP) of Swan's listed shares exceeding the Initial Fixed Conversion Price (as defined below) for each day during any 30 consecutive trading days.

Each debenture is convertible into class A shares at the option of the holder. Each debenture will be convertible at the lesser of (i) EUR 0.30 or the VWAP for 5 trading days before closing of the first tranche (the Initial Fixed Conversion Price), and (ii) 100% of the average of the 3 lowest VWAP prices in the 40 consecutive trading days immediately preceding conversion. For each of tranches two through five, the fixed conversion price is 135% of the previous fixed conversion price.

A coupon of 1%, payable in cash or shares at the time of conversion. For each tranche (if and when advanced) a closing fee of 3% of the par value of the debenture is payable. The closing fee will be settled in further convertible debentures.

A Term of 5 years.  During the term, Swan may not issue other convertible securities with terms similar to those of this agreement. At maturity, all outstanding debentures will be converted into shares. Swan is entitled to redeem the debentures at any time at 135% of their par value plus accrued dividends.

Swan will grant warrants to GEM in respect of 20 million shares at a price per share of EUR 0.50.  The warrants will be exercisable at any time during a four year period after they are granted.

Furthermore, Swan is in discussions with various parties to fulfil its medium and long term financing requirements to expand the Spyker business, including the production of the SSUV Spyker D8 Peking-to-Paris.

9. Publication of 2011 year results / ordinary meeting of meeting of shareholders

Swan shall publish its annual report 2011 on 27 April 2012. Swan's regular annual meeting of shareholders shall be held 12 June 2012.

Victor Muller, Swan's CEO said: "There can be no doubt that 2011 was the worst year in Swan's history. In spite of all our efforts, Swan could not prevent Saab Automobile's bankruptcy, which left both Swan and Spyker in a very serious financial position. With  agreements in principle to convert the Tenaci, LAT and Epcote Loans and various agreements with creditors as described above and,the GEM Convertible in place , Swan is determined to fully focus on growing the Spyker business again."


SPYKER N.V.
Edisonweg 2
3899 AZ Zeewolde
the Netherlands

PR CONTACT
SPYKER N.V.
Sander van Dijk
vandijk@spykercars.com
Spyker Press Kits

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