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EU Approves Swedish Loan Guarantees To Volvo

ABR Staff Writer Published 09 June 2009

The European Commission has approved loan guarantees by the Government of Sweden to Ford’s Volvo unit, in order to develop green vehicles.

The guarantees will allow Volvo to borrow from the European Investment Bank (EIB), the European Union’s long-term lending agency. The commission said that Volvo is seeking €500 million in loan to finance its €1.9 billion project. The project is intended to develop more fuel efficient, low-emission vehicles.

Neelie Kroes, EU Competition Commissioner, said: “The state guarantees would contribute to Volvo's investment project for environmentally friendly cars without giving rise to any undue distortions of competition.”

Earlier, EIB granted Volvo a loan of €200 million to develop new green cars, provided the carmaker could secure loan guarantees. The loans and guarantees approved by the EU will be provided in five tranches over the years 2009-2010, with a maturity period of seven years.

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