Reuters: Saab owner warns of funding

Reuters earlier today reported the following:

The funding warning from Spyker came shortly after Saab struck a deal with one of its key suppliers, International Automotive Components Group (IAC), after being forced to stop output for a third day running due to payment disputes.

Unfortunately I became aware of this (thanks to a comment here) too late to confirm this with anyone at Saab.

The latest press release on Spyker’s web site is from Marc 30th and states:

Saab Automobile has sufficient means to meet its immediate liquidity needs from existing and available sources.

The Reuters article unfortunately does not mention any sources other than the annual report.

It seems to me that the press release dated March 30th contains newer information. But even were that the case, it doesn’t mean the situation is rosy. The annual report states there is a need for further funding. It remains to see just how acute the need for immediate funding is. The focus on Antonov is nothing new and is a poor indicator to figure out how severe the lack of positive cash flow really is.

Ironically, Saab is better than average at paying their bills(thanks Gatelaw)

—-

Fred sent a link to Joann Muller’s blog entry http://blogs.forbes.com/joannmuller/2011/04/01/saab-is-running-out-of-money-and-could-collapse/.

What John is missing, as GM and its federal backers know all too well, is that it takes an awful lot of capital to run a successful car company in a highly competitive, global market. This is a lesson Saab and Victor Muller are learning now.

Nobody said it would be easy.

CJ
Member
5 years 5 months ago

One word…Wow.

JaJ and management departures, CFO backing out, this weeks vendor drama, and now this. Wow.

Seb C
Member
5 years 5 months ago

As has been said before, the wording chosen seems to beckon authorities to accept VA’s capital infusion. Nothing new, and if it is accepted we can hope it should be accompanied very quickly by an announcement on the 9-2…right?

Jeff
Member
5 years 5 months ago

I don’t think that announcement would be made so soon even if VA comes on board, though I understand your logic.

JH
Member
5 years 5 months ago

Is this really news? I thought they said the same thing last year.

RGSU
Member
5 years 5 months ago

The first order of business if VA gets in is likely shoring up the capital reserves and paying off the EIB loan, getting the balance sheet in order, etc.
The 9-2 can wait. Survival first.
Also, I would like to echo CJ’s comments that the new team is doing an outstanding job – look what they walked into!!

Jos
Member
5 years 5 months ago

A (serious) dutch news paper this evening reported that this warning is an obligatory thing for the accounted that checks every publically listed companies year end figures. Muller comments that it’s a formality and that there is nothing to worry about. And frankly, I agree with the Muller Man.

Jos
Member
5 years 5 months ago

accountant that is

Lars S
Member
5 years 5 months ago

Thank you very much, Jos.
Now I’ll be able to sleep tonight. I’d better hurry to bed before CJ or someone else comes back and scares me again 😉

aero
Member
5 years 5 months ago

+1

JasonPowell
Member
5 years 5 months ago

Jos,

I like that, “The Muller Man” too funny, lets see if it sticks.

talladegan
Member
5 years 5 months ago

It is indeed ‘standard procedure’ and a requirement.

Chicago Swede
Member
5 years 5 months ago
Greetings Everyone, In my humble option, the best thing we all can do to support SAAB is to start shopping! We all know there are incredible deals to be had at your local SAAB dealer. SAAB needs to show the world that SAAB products sell in the marketplace. As much as we love the brand, it is first and foremost a business. So if you can, I suggest either you take your friend in his 10 year Volvo down to the dealer or consider for yourself how much fun it would be to have a new SAAB in your garage.… Read more »
Mailr
Member
5 years 5 months ago
I heard a sound clip of VM on the Swedish TV4 news tonight, that didn’t sound that nice. It was VM getting upset on a journalist, and it was obviously taken out of context, so I assume that the story leading up to this was not getting the answer he wanted from VM. Unfortunately, I think people associate this with Rovers last years, and don’t remember that BMW had trouble selling Rover, while there were many takers for Saab, Saab was expecting losses up to 2012 (which means, surprise, negative cash flow if you don’t sell off assets), and that… Read more »
rodmylon
Member
5 years 5 months ago

+1
This is a concern of mine too! VM is too emotional and burns bridges… He shouldn’t handle day to day operations, only be an inspiring leader/entrepreneur. Now find that new CEO ASAP!

Henric Tungström
Member
5 years 5 months ago

You might have a point, but the reporter he was telling off was Jens B Nordström who have just released a book about Victor where he´s not described in a very nice way.

rodmylon
Member
5 years 5 months ago

Yes, but TV4 holds all the cards, and in the end forms the view of the public! It seems a CEO just has to suck it up and take the hits below the belt and continue on. Saab can’t win confidence by verbal debates or insults, but by actions and performance!

Mailr
Member
5 years 5 months ago

+1
There is little doubt that the sound clip was unfair to VM, and it contained absolutely no facts. But the point is that TV4 did their best to missuse the phone call with VM, and him sounding annoyed wasn’t to his advantage. If it would have been JAJ’s soft voice expressing some general confidence in Saab TV4 would have a hard time missusing it. But JAJ is hard to beat in this department.

Henric Tungström
Member
5 years 5 months ago
yes, you´re both right, it´s just that I´m more of a Victor guy, I don´t understand how they manage to keep their fists in the pocket at all. Hospitals would have been full of reporters and “authors” if it was me they were discrediting. I know he should have done it the J-Å way, but I so understand him. Victor says: “Jens I don´t think we have anything to discuss, you can read, I have absolutely nothing to tell you so please hang up the phone.” For us who know about the book the behavior is understandable, but of course… Read more »
rune
Member
5 years 5 months ago
The press holds a certain power. My parents’ company went bust in the late 80s after a series of probing articles from a minor trade magazine. They were not interested in taking out ads in this particular magazine, and subsequently they received some nasty headlines in return. This scared away a big customer and the banks grew sceptical. My mother later sued the magazine for libel and won, but that was a very small consolation. The Norwegian courts at that point had a practice of rewarding only minor damages. So yes, the press must be handled responsibly. My wish is… Read more »
RS
Member
5 years 5 months ago

Rune, OT could you look into the new Saab warranty policy adopted by Saab Norway (5 years instead of 3). If the same thing would become reality in the rest of Europe I think it could be as big of a deal for Saab sales as the 120g diesel.
I know several who’d dump their interest for all kind of Korean makes instantly.

rune
Member
5 years 5 months ago

RS, that is an excellent question. I will see if I can come up with an answer.

Uddo
Member
5 years 5 months ago

Bad!!
It´s also on Wall Street Journal and Automotive News!
I think not everyone understand “thats it´s formality”.

http://blogs.wsj.com/source/2011/04/01/spykers-annual-report-makes-for-grim-reading/?mod=WSJBlog&mod=thesource
+++++++++++++
http://www.autonews.com/article/20110401/ANE/304019906/1193

JH
Member
5 years 5 months ago

Victor Muller has said himself that he is not suitable as the permanent CEO of Saab and therefore hopes his interim CEO position will not last for long. By the way, Jan Åke Jonsson is still the CEO of Saab until May 19th and by that time a successor may very well have been appointed.

JH
Member
5 years 5 months ago

That was supposed to be a reply to rodmylon’s comment no. 14.

rodmylon
Member
5 years 5 months ago
Yes, I’m very well aware of that statement (even before JÅJ left), and my respect for VM grew a lot at that point since he seemed to know his limits. Now it’s time to walk the talk. It might be increasingly difficult to convince anyone to take the job considering this weeks circumstances. And I predict it’ll only get worse from here, due to the liquidity warning given this evening. There’s no stopping the Swedish media now, except a new believable CEO, a highly professional and active PR team and additional financing sorted out shortly. Let’s keep our collective fingers… Read more »
BoeBoe
Member
5 years 5 months ago

This is no secret. Just read the annual report that Spyker published this morning. You can find it on their website.
http://www.spykercars.nl/download/investor/31.03.10_-_2010_Annual_ReportFY.pdf

Read it and learn!

Emphasis of matter with regard to the continuity of the Group.
We draw attention to note 2 to the financial statements, which describes the continuity of the Group. As set out in this note, there are a number of uncertainties regarding the funding of the Group, which implies that if management may not be able to generate the necessary additional funding, or adverse developments occur, the continuity of the Group will become uncertain.

(words of the accountant)

Steve C.
Member
5 years 5 months ago
When the production stoppage was first reported, subsequent SU posts reported that a procurement system issue may have been part of the supplier problem. A cash flow issue wasn’t obvious. It seems by the end of this week we learn officially of liquidation problems. There were earlier stories that indicated Spyker/Saab was looking for more flexible financing (via VA) but our speculation was more flexiblity and not a dire cash flow situation. In hindsight, all the “dots to connect” now make sense regarding cash flow (except I don’t think JAJ’s retirement was to leave a sinking ship, especially since it… Read more »
Mailr
Member
5 years 5 months ago
Well, VM said a week or two ago that Saab probably needed some more cash this year, and the business plan always said loss in 2011, so I would say that a negative cash flow is expected. If the new 9-5 SC takes off big time in Sweden (which is a real possibility), this will cause liquidity problems UNLESS Saab has managed to get 90 days credit from suppliers (if they can produce and deliver cars within 60 days the suppliers provides liquidity as Saab sells the cars, made on order, on 30 day payment terms). And I think this… Read more »
BoeBoe
Member
5 years 5 months ago
WSJ analysis: Spyker’s annual report has revealed what we already know and have reported—namely that Saab needs new equity to be able to keep going. Today we have the figures. It’s bleeding cash and debt interest payments are high—some €40 million last year. In fact, a deeper look at the balance sheet and you can see that it currently cannot afford to cover its debt payments while at the same time putting its business and capex plans in place. It would need an injection of at least €300 million of equity just to be able to generate enough free cash… Read more »
rodmylon
Member
5 years 5 months ago

Indeed somewhat troubling. As I understand it the EIB loan is to 90% made up of a very affordable and low interest rate. The last 10% are borrowed by the Swedish state/Riksgälden at a market level interest. How VM thinks loaning those 500 million from the market and get away cheaper (considering the state Saab currently is in, and what levels of interest they could get), the debt interest might only increase. Sales needs to take off, and they would have if the trust in Saab is not damaged too much now. Act fast VM!

Mark O
Member
5 years 5 months ago

*Gulp*…. not worrying…not worrying..

rodmylon
Member
5 years 5 months ago

I’m more worried about the reaction of the press, and in particular the Swedish. I think VM still has some cards up his sleeve, but the press will be watching his sleeve closely…

JasonPowell
Member
5 years 5 months ago
rodmylon, we need to be careful not to feed that press though. A lot of people are on here saying this is what’s wrong, that’s what’s wrong not knowing anything other then what’s being “reported”. By constantly jumping on and off the band wagon, it’s no wonder people are talking about poor consumer confidence. Don’t feed the animals, we all know and it should be no surprise that an auto maker coming back from the dead would have bumps and bruises along the way (especially when they didn’t have a bailout package to draw from) and we need to try… Read more »
Tomas TL1000R
Member
5 years 5 months ago

+1

zippy
Member
5 years 5 months ago

Add a +1 from me on that too!!

paddan
Member
5 years 5 months ago

I agree too.

sala or bust
Guest
5 years 5 months ago

Thank you.
Keep calm and car…you all know the drill, right?

rodmylon
Member
5 years 5 months ago
I’d like to repost something I wrote last night on an article that went off the front page already: – – Hmm, I guess i stand in the middle between Börjesson and Jeff [concerning last week’s situation and the posting on SU]. The severity of the PR disaster in the Swedish market is without comprehension for anybody not from the northern countries (I’m from Finland myself, nativly (Finland-)Swedish-speaking though). The confidence in VM is below zero in the media. The “severity” and “danger” if Saab’s situation is being touted in every tv-news and business news, with serious reporters standing in… Read more »
RS
Member
5 years 5 months ago
Rod, the more we’re tooting that Saab can’t be trusted the more it becomes a reality (perception, remember). Unless you work for Saab there is very little one can do except to be supportive and visit a dealer. Your venting doesn’t help Saab, just the opposite. We’re are talking everyday over here what Saab can do better and they have actually done many things we’ve suggested. I don’t want that to see that connection to be cut off because to many are only making contributions in form of shouting out their own frustrations. Monday morning quarterbacking is SOOO easy compared… Read more »
rodmylon
Member
5 years 5 months ago
I agree that we shouldn’t be resorting the levels of the comments on some sites. But we shouldn’t close our eyes to the reality, that’s not what this site is about. I never believed it would be easy, but the current situation is, as I’ve understood it, outside their worst-case scenarios. I also understand the difference between saying something and doing something, it shouldn’t stop us from assessing the whole situation. We all need to be on the same page. I’m the first one to agree on that “Saab has already done more in a year than GM in a… Read more »
Jeff
Member
5 years 5 months ago
rod- I’m absolutely with you we need to have a range of outcomes in mind for Saab, and that in the back of our head we should always be aware of how fragile the whole situation is and what a tight rope that management is walking on. I’m with you 100% in the hope that Saab gets a credible CEO and PR team in place to be able to swiftly deal with media firestorms and put out flames in the future. Credibility is key, but so is consumer confidence, and in this situation, they couldn’t have one without sacrificing the… Read more »
rodmylon
Member
5 years 5 months ago
Thorough and good answer. My point was not that Saab should go out and speculate on their fragile situation or any internal problems, neither was it that I didn’t expect them having challenges or bumps in the road. It is more about the way this was handled. Perhaps they started the project of getting more funds a long time ago, we cannot know, but letting it getting this far and then loose the control of the PR for a brief moment – that’s my concern. Same goes for the CEO situation. VM needs to step up the communication, make everybody… Read more »
Jeff
Member
5 years 5 months ago
Real quick- are you saying that as soon as the suppliers cut them off and the press got a hold of the production stop that they should have right away said “We’re having funding issues and we’re working on getting a bridge loan” instead of “These are normal routine hiccups and we’re working to restore production as soon as possible”…? I maintain the Swedish press should have shut their mouths, given Saab some space until they were ready to announce the fact that they’ve been working behind the scenes to get new funding. For their own health and out of… Read more »
paddan
Member
5 years 5 months ago

Agreed entirely Jeff. Regrettably, the power of the press can cause a self fulfilling prophecy. I sincerely hope that doesn’t happen to Saab. And many of the issues of today can be traced to Sweden dragging it’s feet during the sale Saab first to the Konigsegg group. I would submit that Saab became damaged, in great part due to delays caused by the Swedish government and NDO. Let’s pray that doesn’t happen again.

Francisco
Member
5 years 5 months ago

1. The succesor of JA should have been cleared before the announcement of the leave.
2. VM is a fantastic seller and a dream builder, but he should leave the economic business to another with this type of speciallity.
3. Without JA swedish media will attack VM directly with any type of bad news.
4. Saabs needs a officiall spokesman with political skills and swedish mentality.
5. The 9-3 will save Saab, not the actuall portfolio

michaelb
Member
5 years 5 months ago
This is a serious crisis, and it is not be blamed on anyone else than VM. Quick decisions are required. I think it is all about funding and public trust. If it fails, this might be the end certainly for Spyker, but even Saab’s future would be in the clouds. That the original business plan would not work was to be anticipated, when sales turned out to be much weaker than expected in 2010. The takeover by Spyker was on a highly leveraged base, thus sales were crucial. That sales did not catch up in 2010/ early 2011, is not… Read more »
RS
Member
5 years 5 months ago
Michael, I agree on most counts but you can’t put blame on VM for poor sales. It’s just unfair. He and JÅ were doing everything they could to promote Saab while cars hadn’t even arrive in the US and marketing was non-existent in Europe. Lets face it the biggest problem of Saab is perception. With the last weeks turmoil it didn’t get any better, but the real issue is what the public know and feel about the cars in terms of value. We here know Saab is on par or better than ze Germans competition (minus a few narcissistic details… Read more »
michaelb
Member
5 years 5 months ago

RS,
I have reread my text, there is no point I blamed VM or the the management for poor sales in 2010/early 2011. The only true point is that Saab, whoever that was, created a problem with the 9-5 sedan in the US market.
For the rest, I am in line with your base ideas. The only thing I wood consider as Saab right now is to give additional sign-on incentives in markets with big margins for Saab for the new models (9-5 sc, 9-5 sedan, 9-4x). That would insure more sales, visibility for the new models.

Jeff
Member
5 years 5 months ago
Michael, great post and I agree with you almost completely save a few minor details. It’s not easy or cheap to source a bigger V6 diesel and get it certified and working right away in the next two years, if liquidity is an issue now the payback vs. initial investment just isn’t quick enough to warrant it. I’m with you that it would bring in more cash, but the breakeven wouldn’t happen until 2013-14 at the soonest, and Saab needs cash now. Crappy situation, but that’s where they’re at. On the rest I agree that RS’s ideas are key. Marketing… Read more »
paddan
Member
5 years 5 months ago

Hopefully, there is time for all the seemingly good ideas articulated here. I will say that when I see the bloated inventories in the US even with major discounts and stories of dealers barely hanging on, I am gravely concerned. And if the Swedes don’t have confidence in the brand, why on earth should a US consumer?

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