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GELYY News DJ UPDATE: Swedish Govt Provides SEK3.55B Guarantees To Volvo.

Wednesday, December 22, 2010 6:30 AM

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News for 'GELYY' - (=DJ UPDATE: Swedish Govt Provides SEK3.55B Guarantees To Volvo)

http://online.wsj.com/article/BT-CO-20101222-703913.html?mod=wsjcrmain

http://online.wsj.com/article/BT-CO-20101222-703913.html?mod=wsjcrmain

(Adds details, Volvo comments.)

By Jens Hansegard and Sven Grundberg

Of DOW JONES NEWSWIRES

STOCKHOLM (Dow Jones)--The Swedish government said Wednesday it will provide state guarantees of 3.55 billion Swedish kronor ($514 million) to secure the European Investment Bank's loan to Sweden-based car maker Volvo Cars, owned by China's Geely Automobile Holding Ltd. (0175.HK).

The previous negotiations for Volvo Cars' EIB loans were put on hold in the spring when Volvo Cars was sold to the Chinese automaker. The Swedish government wanted a clearer picture of Volvo Cars' ownership structure before it continued negotiations.

Volvo Cars had initially asked for some EUR600 million in loans from the EIB. The sum it will receive is substantially smaller. Anders Karrberg, executive director of governmental affairs at Volvo Cars, said "much has happened" since Volvo Cars first applied for EIB loans.

"We asked for a larger loan in May this year. However, since that time we have gotten a new board of directors, a new chief executive and new a owner. This also means we have re-evaluated our financing strategy. The amount agreed upon today is what we asked for," Karrberg said.

Karrberg said Volvo Cars plans to use the loans for a number of environmental projects that are either ongoing or about to be launched, such as new product developments and reducing CO2 emissions. However, the company does not plan to hire additional employees as a consequence of the loan agreement with EIB and the Swedish Government.

The next stage of the loan process is an agreement between the Swedish National Debt Office and Volvo regarding the terms of the loan guarantees. Volvo Cars expects to sign an agreement with the National Debt Office on Wednesday.

"We will receive the loan in tranches as from early next year," Karrberg said.

According to Enterprise Minister Maud Olofsson, the Swedish state has spent some SEK12 billion aiding the automotive industry during the economic downturn. Olofsson added that it seems as if several of the companies within the Swedish automotive industry are getting back on track and that the need for aid is not as pressing as before.

"It feels more comfortable being the responsible minister for this area now than it did one year ago," Olofsson said.

-By Jens Hansegard and Sven Grundberg, Dow Jones Newswires; [phone]; [e-mail]

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http://online.wsj.com/article/BT-CO-20101222-703913.html?mod=wsjcrmain

http://online.wsj.com/article/BT-CO-20101222-703913.html?mod=wsjcrmain

(END) Dow Jones Newswires

December 22, 2010 06:30 ET (11:30 GMT)

Copyright (c) 2010 Dow Jones & Company, Inc.- - 06 30 AM EST 12-22-10

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