SaabsUnited.com

Swedish news service e24.se published an article with some good background information on Saab’s situation with the reorganisation process. Specifically, it deals with debts, and Saab’s vulnerability to debtors once out of creditor protection.
This isn’t about building or driving cars, but is relevant material in terms of understanding Saab’s current position.
The translation was done by ctm for Saabs United readers.
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Friday last week saw a telephone conference in the creditors’ committee, the group of creditors that Saab is obliged to keep informed during the reconstruction period. That was when Saab said that reconstruction now is about to be closed. But no details on the financing of the deal with Koenigsegg were given.
- “We had a short telephone conference in the committee. I do not want to discuss in detail what was said, but regarding the financial situation nothing were discussed. There were no news at all,” says Mats Hagelin, the Swedish Tax Agency’s representative in the creditors committee.
Saab has been under reconstruction since February 20, and has since been protected from being declared bankrupt. On Thursday, August 20, the reorganization period ends and Saab’s CEO Jan Åke Jonsson has confirmed that there is no intention to seek a further extension.
75 percent of the debts of 10 billion SEK has been written off in an arrangement which was completed June 17. GM has paid the remainder of the debts to suppliers and have converted their debt after the composition of SEK 2.8 billion to equity, according to news sources.
As of Friday, August 21, it will be theoretically possible for a creditor to put Saab in bankruptcy.
This, however, requires that the applicant can demonstrate that the company is insolvent, either by being unable to pay its debts as they fall due and/or can’t pay future liabilities.
- “The protection that the reconstruction means is not retained after Thursday. But on the other hand, a reconstruction puts a hard strain on the company’s liquidity because you can’t manage invoices as usual, with credit, since they must be paid immediately. There are advantages to exit a reorganization period,” says Mats Hagelin.
The importance of showing up an economically healthy company is also a big one if Saab has to convince the European Investment Bank that they should get the loan of 4.3 billion SEK.
- “It is probably doubtful that a company applying for loans from the EIB can be in reconstruction,” says Mats Hagelin.
He stresses that the Tax Agency is not interested in forcing Saab into bankruptcy. Instead he express a “hope that the deal in any case will be successful.”
- “We have no reason to put Saab into bankruptcy. We have no debt not covered by the composition. Saab has paid all tax debts during the reconstruction, so the claims we, the State, have are not due until next year,” says Mats Hagelin.
Although the Tax Agency hopes that the deal with Koenigsegg Group goes without a hitch, the authority still made a declaration of no confidence of in connection with vote on the composition proposal in May.
Of the 579 claimants, 107 chose not to participate in the vote. 472 creditors – equivalent to 81,5 percent – had given administrator Guy Lofalk a proxy vote in favor of the composition. The Tax Agency voted no on the grounds that the financial solution was too unclear.
Was the meeting last Friday of any importance for you?
- “For our own part, it was not that really interesting. We had marked our intention with the composition proposal. We voted against the proposal. I can’t say that the meeting revealed something that we benefit from. You can say that the meeting focused on further action, I do not want to be more specific than that,” says Mats Hagelin.
The Tax Agency has claims at just over 348 million SEK and is not a leading creditor. The largest creditor is GM. The 348 million SEK is money that Saab was paid in the form of State wage guarantees and social security contributions for employees during two months. In addition, there is a smaller amount of customs duties.

What a 24 hours we’ve had!

Things have moved to another level all together. I thought I’d whip up this summary entry to gather together all the various bits of news, the reactions and things we’re possibly still a little unhappy about.

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The Deal

Koenigsegg have signed a Stock Purchase Agreement with General Motors to take Saab Automobile off GM’s hands. The details of the deal were not disclosed in the press release from GM, but several Swedish media sources claim knowledge of the deal.

I’ve not taken all the sources for this summary, as I believe some of them (*cough*bloomberg*cough*) are smoking some wackyweed.

The press release merely states that the deal is conditional upon some funding being provided in different ways – via support and guarantees from the government, transitional funding from GM, etc.

Basically, there wasn’t much, if anything, we didn’t know already.

The Swedish media had more juicy stuff, however.

- The price tag is basically zero, but GM has an agreement that allows them some profit if Koenigsegg can manage to get Saab back on its feet, says a person close to Saab.

Koenigsegg will receive a lot when the company takes over Saab Automobile, among others things:

GM will give up three quarters of Saab’s debts, or 750 million dollars.

Koenigsegg get the rights to produce the next generation of Saabs (i.e. 9-5 variants and 9-4x) for free. The value of this right is by analyst DN Ekonomi talked to estimated to around 2 billion dollars.

Saab will not have to pay back the money that GM supported Saab with during this years reconstruction.

Machinery and equipment required to manufacture the Saabs will be transferred to the company.

Some of the sources are saying that the Koenigsegg Group are putting in $100m. Others are saying that they still need another US$400m, which they’ll have to source from outside as it seems the Swedish Government won’t support them with a loan and the EIB money can only be used for green technology stuff.

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GM ownership

Some reports stated that GM would retain a minority stake in stake in Saab, possibly in the form of preferential shares with limited voting power but retaining dividend rights if and when Saab are successful. Both the press release and a report from DI.se disprove this, stating that Saab will be sold 100% to the Koenigsegg Group.

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Reconstruction

Saab, as was thought earlier in the week, will exit reconstruction this week as part of their progression towards new ownership.

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The players

I was informed last night that there would be an interview with Augie Fabela (the K-Segg Group Chairman) in the Swedish news today.

That hasn’t appeared online yet, though it may be in the print media. Hopefully something will be forthcoming soon as I’m sure this interview will address some of the stuff we’ve been interested in for some time, about the group and their plans for Saab.

Jan-Ake Jonsson and Christian Von Koenigsegg appeared in a video shown at GM Europe TV and in that, they addressed what this latest signing means, whether there’s adequate funding, who the Koenigsegg Group are, etc.

Whilst they did touch on those subjects, it must be said that it was a scripted event, without a chance for press questions.

Still, it was good, and reassuring, to hear something from the top.

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The reactions

This day has been a long time coming and whilst it’s possible that you could still be a little frustrated by the timidity of the whole event, the significance of Saab and Koenigsegg getting this far should not be underestimated.

Of course, the Swedish press are underestimating it somewhat, with the repeated calls for Koenigsegg Group to ‘show them the money’. Commenters note the view from the press that all that’s happened here is another piece of paper has been signed.

That may be true, but I get the feeling that there’s been a truckload of stuff to get through prior to this being signed. As I said, it’s a significant moment. The due diligence is done, the plans are made, the belief is formed and the players have now committed to the purchase.

Jöran Hägglund, the Secretary of the Industry Ministry, and the man dealing with this whole affair from the Government’s point of view, outlines four more things that have to happen:

• Koenigsegg must add (or disclose) more private capital
• They have to get through the EIB loan process
• They have to get through negotiations with the government on guarantees for those EIB loans, and finally….
• The EU Commission has to approve those loans.

If they can line those particular ducks in a row, then we might have something to work with here.

Analyst Matts Carlsson states that the SPA being signed today puts some pressure on the government to provide the loan guarantees. If the companies have satisfied each other well enough to get to this point, then the government should perhaps do a little more to come to the party and be more of an enabler for the sake of Swedish industry (that’s my take on it, at least).

The press release has been (finally) released.

There’s video of Jan-Ake Jonsson and Christian von Koenigsegg talking about the whole deal.

Now it’s time for the other player in this drama – Jöran Hägglund

Here’s a Googletrans from DI-se

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Hägglund: Four step for Saab

“If all the pieces fall into place, it is a welcome step for the employees, Trollhättan, the region and the automotive industry. But there are many parallel complex processes going on simultaneously,” said Jöran Hägglund (C), Secretary of State at the Industry Ministry, at a press conference on tisdagen. He mentioned four steps. The most crucial is that Koenigsegg adds significant private capital.

“Automotive industry is the industry with the highest risk premiums in the market. While there is great potential.”

Other issues are negotiated with EIB loans. It is they who go through the company’s performance and determines the size of the loan.

Koenigsegg will also agree with Riksgälden on loan guarantees. Finally, the EU Commission approve the terms of the loan guarantees, said Jöran Hägglund.

The government has received a statement of ownership within the Koenigsegg. It now remains to securing the capital, says Jöran Hägglund. How large amounts involved, he does not want to comment on.

“There is significant amount but we want to be clear that it is not so that the taxpayers should go in and finance the deal between GM and Koenigsegg. Had it been so, we had gone in and bought the company from the very beginning.”

Under the deal Koenigsegg Group takes over all shares in Saab from GM, which means that GM completely leave its ownership position in the new Saab. It was previously speculated that GM might wish to retain a minoritetsdel of perhaps 10 percent.

TT: Why did it not so?

“I can not enter such details, but we have signed a aktieköpavtal which includes certain conditions of the agreement should be honored, and we expect it to be completed within a few months,” says Halldora von Koenigsegg, married to Christian von Koenigsegg and himself engaged in Koenigseggruppens business.

The most important condition is that the state guarantees a loan from Bank of 600 million U.S. dollars, around 4.3 billion. Is not the Swedish government in the affair, it may scupper the whole weight.

But GM also promises in the agreement now signed to continue to cooperate with Saab. The companies have, so to speak, the children of technology, as platforms and similar, for a long time.

This should be solved through licensing and service, explains in a press release from GM, Saab, and Koenigsegg.

“There are certain things that fall under GM’s commitment to make it an end in the store,” says Halldora von Koenigsegg to TT.

Funding is still höljt in a haze even if it purports to be resolved to 70 percent.

TT: How will you get the rest.

“The greater part is in port, it’s about 30 percent remaining of the funding will be covered up. It hopes to solve during the final phase of negotiations.”

Koenigsegg has to be as helpful as possible when it comes to present the total funding, “says Hagglund.

“It is not up to us to determine their business plan, but we want as far as possible avoid the risk of having to go into.”

If the amount of 720 million that the financiers themselves are reported to have invested in the deal with GM is big or small want Jöran Hägglund not comment.

Dagens Industri will feature a full interview with Augie Fabela on the Saab deal in tomorrow’s edition (I don’t know if it will be online) but they’ve pre-empted this with a story about the deal, featuring some snippets of that interview.

The following is a full translation that was done for Saabs United by Carl-Henrik B. My thanks to Carl-Henrik!

It’s nice to see them accentuating the positive in the headline…..not.

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“Still the billions missing in the Saab-deal”.
Updated: 2009-08-17 at 23.05.

Koenigsegg Group has signed a binding agreement with GM to buy Saab, reveals Koenigsegg Group chairman Augie K Fabel to Dagens Industri. He states that still there is 3 billion Swedish kronor (about 400 million USD) missing in financing.

After eight weeks of negotiations the parties have come to an agreement, states Augie K Fabela in an interview with Dagens Industri. According to other mediasources the deal will be presented during Tuesday. General Motors shall continue to act as a stakeholder in Saab and get preferences-shares with rights to dividends in the new Saab.

GM puts 2,8 billion SEK in preference-shares and together with an expected loan from the EIB of 4,3 billion SEK it’s about 3 billion to finish the deal.

“In a normal macro-economic world, it would have been easy to get banks to finance this. But in today’s world they do not” – says Augie K Fabela to the newspaper. Augie K Fabela reveals that he personally invests but doesn’t say by how much.

Koenigsegg Group shall invest 720 million SEK, writes the newspaper and refers to data from Saab in Trollhättan. The Norwegian Bård Eker and Christian von Koenigsegg also contribute with straws to the stack.

Any information from Saab Automobile in Trollhättan is not possible to get this evening.

The first comments will be provided by GM, and it is GM that determine when information should be provided” said Eric Geers, Information Manager at Saab Automobile, to TT (Swedish News Agency).

The reconstruction of Saab Automobile began in February after the owner General Motors stated that it takes it’s hand away from the Swedish company by the end of the year. According to a decision in Vänersborgs District Court the reconstruction should be finished on Thursday. If the deal between Koenigsegg Group and GM isn’t totally finished by then, the company can apply for an extended time period.

With the stock transfer agreement, which now appears to be the signed, Saab would be able to get out of reconstruction, which has meant that the company has had its debts to creditors forgiven by 75 percent. But parts of the funding thus remains still to be resolved. Saab’s application for a loan from the European Investment Bank (EIB) assumed that Saab must have government loan guarantees, and negotiations are underway with Riksgälden and the government must bless Saab’s business plan. The Board of Directorrs for the Bank (EIB) should consider the request September 22.

Augie K Fabela says that it received a clear support of the request for government guarantee from those involved in the issue by the government. We also recieved support from the government after our meeting last Tuesday with Secretary of State Jöran Hägglund,” says Fabel in the interview. TT searched during the Monday evening Jöran Hägglund (C), but he would not make any comments at that time.

If you’re seeing this guy, you know it’s good (and early) news….

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The Reuters report:

STOCKHOLM (Reuters) – Sweden’s Koenigsegg has closed its purchase of money-losing Saab Automobile from General Motors Co GM.UL, but financing arrangements have yet to be finalized, a Swedish daily said on its website on Monday.
Dagens Nyheter, citing sources, said GM and Koenigsegg had agreed on a “very low” price for Saab, but the deal required the Swedish government to guarantee a loan by Saab from the European Investment Bank.
Spokespeople for GM Europe and Saab declined to comment and Koenigsegg was not immediately available for comment.
GM Europe announced in mid-June it had struck a deal to sell Saab to Koenigsegg and the sale was to close by the end of the third quarter.
“The price tag is non-existent but GM has a deal that grants them revenues as well if Koenigsegg manages to get Saab back on its feet,” Dagens Nyheter quoted a source close to Saab as saying.
The European Investment bank is expected to process Saab’s loan application by end-September.
Sweden said on Aug 7 it had received information on a possible pullout of investors backing the deal. But there has been no further statement by the government on the issue since then.

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The official announcement is yet to come.
I suggest you Swedes get a copy of Dagens Industri in the morning – there’ll be a full and exclusive interview with Augie Fabela about the situation.
There should also be an official press release at 7am (Swedish time, 3pm here in Oz) and some film that was shot late in the evening in Trollhattan, featuring Mr Von Koenigsegg himself.
Now, do remember the joy you felt?
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Last night I went to bed just after emailing Kroum at 1:18am and at that time, there was still another 13 hours and 42 minutes until embargo time (3pm, Aussie time).
It took just another 56 minutes before someone in Sweden broke the news – the first email landed in my inbox at 2:14am.
Yes, I knew this was coming, but I honored the embargo.
I did, however, tell one trusted Saab guy (ctm) before heading off to bed last night. He bet me that the comments section of Koenigsegg, wherefore art thou? would be full of the news before I woke up.
How right he was.
And thanks not only to Turbin for the 6.30am wakeup call, but also to all the people who emailed whilst I was sleeping…..