UPDATE at the bottom
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A US judge has approved the sale of GM's good assets (sic) to the new GM, allowing them to exit bankruptcy proceedings a fair bit earlier than expected.
From the press release:
NEW YORK - General Motors achieved another milestone in its reinvention last night when Judge Robert E. Gerber of the U.S. Bankruptcy Court for the Southern District of New York approved the sale of substantially all of General Motors Corporation's assets to NGMCO, Inc., an entity funded by the U.S. Department of the Treasury. In connection with the closing of the sale transaction, NGMCO, Inc. will change its name to General Motors Company and continue to operate under GM's historic corporate and sub brands. The approval marks another step toward the launch of an independent new GM.The new company will acquire GM's strongest operations and will have a competitive operating cost structure, partly as a result of recent agreements with the United Auto Workers (UAW) and Canadian Auto Workers (CAW).
The new GM will have lower leverage and a stronger balance sheet, which when combined with a lower break-even point, will allow it to reduce its risk, operate profitably at much lower volume levels, and to reinvest in the business in the key areas of advanced technology and product development. GM's subsidiaries outside the United States will be acquired by the new company and are expected to continue to operate without interruption.
That last sentence is interesting in that the press release doesn't mention which subsidiaries will be acquired by the new company. We're pretty sure Daewoo and Holden will be part of the new GM, but what of Opel and Saab? It's assumed they're part of the old GM, which according to Automotive News, is being liquidated.
Under the deal, 'New GM' will operate the best parts of the old company, including its Chevrolet and Cadillac brands, with a less expensive workforce, smaller dealer network, and much less debt. The rest of the company will be liquidated.
It's an interesting aside - who's selling Saab? New GM or old GM? It's always been assumed it would be Old GM, but it's not being liquidated and I assume all future dealings will be with new GM so maybe it's going as part of the new deal?
Either way, Saab will be sold.
And that's the news we'll be waiting for later this week. Will Koenigsegg be able to sweet-talk the Swedish government into loan guarantees? Will there come a time in the next five days when GM are led to believe that their preferred partner can't close the Saab transaction, forcing them to open the bidding up once again?
The game isn't over yet, folks.
And geez it's been nice to not talk about General Motors for a few weeks. A sign for the future.
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UPDATE:
Just as I was finishing this post and hitting 'save', the following was posted in comments by Börjesson:
Göteborgs-Posten reports that SAAB surprisingly ended up in the "healthy" part of new GM.
So it seems the new-GM theory, above, is true.
Still to be sold, but it's nice to beat the assumption that Saab was one their crappy assets.
Göteborgs-Posten reports that SAAB surprisingly ended up in the "healthy" part of new GM.
SAAB is saved as a part of the "good assets"!
Didn't expect that. So why if GM views SAAB as such, has it been treated so badly? :)
As mentioned above, I think it's just the required mechanism for Saab and GM to keep doing business in the future. They sell Saab out of new-GM and keep doing business with new GM for the 9-4x, platforms, parts, turbo tech, etc.
The old GM is being liquidated, which is a much less orderly sale process than what Saab is going through.
From an Associated Press article this morning:
Assets that GM does not sell to the new company will become part of the separate "old GM," which the company said Monday will be known as Motors Liquidation Co., and will be sold to the highest bidder under court supervision.
The old GM will include a smattering of properties, several of which are facilities already slated to be closed.
Other assets to be filed under the old GM include brands like Hummer, Saturn and Saab, for which GM has lined up buyers. They also include all current GM common stock, which — despite its active trading on over-the-counter markets — will soon be worthless.
The old GM will remain an entity until all of the facilities are sold off, a process that could take months or years to complete.
The government has said it plans to provide about $1.18 billion to fund the wind-down process.
Regarding SAAB, it is good that it is on the "healthy" side: either New GM keeps it, or it disposes of it with some (for lack of a better word) elegance since New GM will be in a much more financially comfortable position than Old GM.
http://www.freep.com/article/20090706/BUSINESS01/90706018/1002
The Old GM $1.2BIL is mostly for environmental cleanups at old factories/properties to be sold and liability claims.
There is a four day stay (wait) to Judge Gerber's ruling, but hard to imagine anything will stop it.
Of course Saab is a good asset compared to liquidation value. A new owner is supposed to somehow, eventually, pay what remains of Saab's debts to GM.
Swade asks two very good questions. Based on what is still happening with Opel, anything can happen with Saab. Anyone else notice how often BAIC has been mentioned when it comes to buying a Euro car company past few weeks/months? Or the steady drumbeat about whether GM can meet 2016 U.S. CAFE standards without Opel? There are also some concerns now with Holden, clearly in New GM, but I started wondering whether a Saab-Holden spin-off made any sense to the New GM...
As to whether K-egg Group can sweettalk the Swedish government into the EIB loan guarantees, or bridge financing? I started to research Volvo when I saw their June09 U.S. sales actually were up over June08, asking myself with all the new U.S. adverts, maybe Ford is not in panic to sell Volvo?
Found a June 30 2009 article in the WSJ about how EIB now refuses any new loans to Volvo, or Ford Europe, because they have never paid off old EIB loans, which were NOT guaranteed by the Swedish, or Flemish governments.
And, if you want another twist on this, U.S. gov just armtwisted Saab Aerospace to back off their bid for 10.4BILUSD in Gripen fighter planes to India because the Swedes were partnering with Israel's IAF on the electronics. The story is reported that the REAL concern was that Boeing and Lockheed would have to lower their bids if Gripens stayed in the mix. India is NOT happy. So, the U.S. Gov might want to play nice with Saab auto after bullying Saab Aero out of a very big deal export contract.
Off to bed.....
With regard to Opel, it will help New GM's CAFE score via the Buick partnership as the Regal (a rebadge of the Opel Insignia) is now confirmed. Regarding SAAB have a question: if New GM kept a minority stake in SAAB (say 10% or 20%) would SAAB's US sales count towards New GM's CAFE score?
Your comment about the Gripen is interesting.... It shows just how twisted the whole market can be, wether its cars or jets. The Gripen is a beautiful fighter with great credentials.... but I doubt Saab Aero or Saab Auto is much on the minds of the US Govt unless a "special action" groups cries about it.
@74Stingray - only reason I mentioned the Gripen deal is to show how politicized this gets in airplanes and cars. The US DoDef TOLD Israel to withdraw IAF from Saab Aero partnership on India tender for which the Gripen was a real favorite, but now has to withdraw. (India liked both the Gripen price AND the geo-politics of a Swedish-Israeli fighter jet supplier). India asks rhetorical 'WTF?, do not Boeing and Lockheed have same advanced electronics as IAF? Is not real issue that Gripen pricing would have forced B & LM to lower their prices?'
US Gov will be majority owner of New GM, so now maybe Sweden wants something for Gripen withdrawal entirely due to official US DoDef policy? Sweden has consistently wanted GM to do right by Saab auto; why not armtwist another 100MIL?
Sweden becomes EU President on Wednesday, and bound to get sucked into EU Opel mash-up, which inevitably includes Saab auto (and Volvo) because there is over-capacity in EU auto assembly. So, which country will be forced to give up which assembly line?
The good news is that Saab, including all dealerships, will now be 60% owned by the U.S. and Canadian governments (New GM) instead of on auction list with that golf course in Clark, New Jersey (Old GM).
And SU can now ignore this part of the Saab story for at least another week because Opel will not be settled before July 14 when Magna Board meets & BAIC finalizes bid. unless you count whether Judge Sotomayor's ownership of a Saab convertible will be an issue when her confirmation hearing starts July 13. (you never know)
I keep wondering whether 9-3 flex-fuels are selling so well in Brazil to be behind JAJ's wanting to increase production.
:)
I have to say you are pretty amazing in your research for Saab AND Sweden in general.You seems to know more about Sweden and our industry than the averange Swede (or shoudl i say..a swedish "Joe-six pack" i guess).
Sorry for being OT ,Swade, i just had to give Karen kudos for her work.
Cheers!
Personally, I wouldn't get too hyped about whether Saab is in new or old GM. Often, companies that are in the process of spinning off a portion of their business will set up a "new" company whose sole function is to collect the costs and revenues of that spin-off. In the case of GM, I suspect it's kind of the opposite: the remaining ('old") GM is what I refer to as the "new" company, collecting those costs. The "new" GM is actually the portion being separated.
Sorry if that doesn't seem to make sense, but it's a spectacular day of warm sunshine and low humidity in SW PA (there is normally only 3 of these average per year), so I'm way less cynical than normal!
and trying to help other Saab enthusiasts to focus on ownership and product instead of this nerve-wracking wait for the decisive fate of Saab.
unlike the current Swedish government, I believe Saab auto is essential to Sweden's national identity
and future economy. not just because I need future spare parts.
so plus 3 for Karen.
But yes, I do think citing the Israeli contracts with Sweden/Saab and the Indians is an essential subtext to Saab Auto's current state. I had a feeling government military contracts might play in the fate of Saab. The military-industrial complex is really the last major force to be reckoned with in the economic restructuring, and while a subtle not talked about subtext, it will play a part in the financing of these companies.
GM might be the "backbone" of American society blah blah but the technology developed and produced is vital to the governments. Chrysler received bail out money because they make parts for cars and other equipment.
So what I'm trying to say in a very sleepy state is that even though the money and financing seems obvious, it's not and I'm SO not surprised Israel has popped up, even marginally.
I'd love to see an Article exploring this: "Saab saved by the Zionists in the effort to stop nuclear war between Pakistan and India". Hehehe.
Saab Aero is no longer associated with Saab Auto and any attempts to tie the fates of the two is a distraction that we can't support with known material.
There may be some legs in it, there may not. But I don't think it serves anyone to hijack an existing thread with something that quite likely will turn out to be a story only between the ears of a few.
SU's M.O is to go with facts that we know, not speculations that we don't have good grounds for.
The fact that has now strayed into the religious and political is a prime example of why.
This might be a application of governmental power that may just affect the Saab-Koenigsegg deal or not.
I really do not think there was any DIRECT "tie -in" for Saab Aero and Saab Auto intended. The people working behind the scenes politicing (Lobbying)against Saab Aero more than likely have nothing to do with, or even cares about Saab Auto.
Karen always adds very insightful commentary from good research, I'd hate to have her feel censored but then again, not my forum.
however, in the end........
Swade, I do agree about keeping politics and religion out, there's plenty of other places for that. This is your game, we either play by the rules or find another game.
As far as I understand, the so called Old GM is mostly real estate and similar unusual assets for an auto mfr. The detritus of history. Probably some good deals to be had if you're a property developer though.
All up, it has to be one of the sorriest, most pathetic chapters in American industrial history.
Saab-hug for you.
PT +1
Everyone: have a relaxing week.
Time for me to watch more chick flicks.
More to that end, the inclusion of Saab in the New GM (even if it really is more of a bookkeeping move than an actual endorsement of the viability of the brand) is a bit interesting. The original plan was just to keep what I call the "homogenized" brands in the new GM (at least in the US) ... with the only one in the group that really had any significant brand identity in the actual vehicle being Caddy (with the folded-paper, angular design language.) The others (Chevy, Buick, GMC) being almost indistinguishable from one another.
Only government would believe that the way to solve the "too many brands" confusion/dilution issue by selling off all of the ones with any uniqueness ... They might as well simply just put a big GM logo on the hood of each and save the expense of producing unique badges!
Saab, Saturn/Opel, Hummer, Pontiac (many of which were actually Holdens) were the last sign of any genetic variation to keep GM's inbreeding practices from diseasing all the products ... Reminds me of the joke about the Ford Model T, where you could get "any color you want, as long as it is black!"
Of course, when you back away from the situation, you start to see that government involvement's dark side may just be the way gov't views cars in general. They are simply a commodity that is best bought in bulk, as few spartan models as possible, and even better if they are all the same color. (I'm guessing that White Pickups, White Ford Crown Victorias and White Chevy Malibus probably make up about 80 percent of the non-military and non-fire gov't vehicles in the US.)
NEW GM... I believe will still have a hand in Saab's cookie jar for a while.
74stingray: as I recall, you needed a Saabhug a few days ago. I no longer publish even my 'deep cover' email. maybe Swade will forward your email to me. or not. it is his blog.
but you are welcome to have my email is Swade decided to fwd it to you.
James
Hugs 74stingray! Don't feel blue for long.
PS: The good women like Saabs.
Germany's Deputy Economy Minister Jochen Homann is quoted now by Bloomberg about Opel: "...“Under no circumstances will there be a decision by next week,” Homann said. “I wouldn’t want to predict how this will end” in terms of GM’s selection of a buyer. ..." About the same time Homann said that, Putin blessed GAZ with 630MILUSD in loan guarantees.
Which makes Sweden the only government that has yet to truly commit to loan guarantees for their auto industry.
Let's hope Saab is on it's own schedule, separate from Opel, and someone in New GM remembers Saab has their own reconstruction deadline to face...
I'd still like to know if Trollhattan is getting new orders for the 9-3 E-85 for Brazil, because THAT might get New GM's attention for either/both a bigger bridge loan from GM, and/or the money to increase the production JAJ wanted on June 30.