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Saab Automobile AB Files For Voluntary Reorganization, Saab Automobile Parts AB And Overseas Subsidiaries Excluded

September 7, 2011 in Archive

Trollhättan, Sweden: Swedish Automobile N.V. (Swan) announces that Saab Automobile AB and its subsidiaries Saab Automobile Powertrain AB and Saab Automobile Tools AB (collectively Saab Automobile) will file for voluntary reorganization today at 09:00 CET with the District Court in Vänersborg, Sweden. Swan and Saab Automobile are of the opinion that, considering Saab Automobile’s current limited financial resources, a voluntary reorganization will entail the best preconditions for using existing resources in the most efficient way. The eventual purpose of the proposed voluntary reorganization process is to secure short-term stability while simultaneously attracting additional funding, pending the inflow of the equity contributions of Pang Da and Youngman.

The proposed voluntary reorganization will be a self-managed, legal process under Swedish law headed by an independent administrator appointed by the court who will work closely with the Saab Automobile management team. As part of the process, Saab Automobile has formulated a reorganization plan, which includes a number of aspects aimed at lowering its cost-base and creating a viable, competitive and independent organization. This reorganization plan will be presented to creditors in more detail within three weeks of the filing, although this period could be extended by the court.

Following court approval, the voluntary reorganization will be executed over an initial period of three months. If required, the reorganization period can be extended by another three months, up to a maximum of twelve months. Swan and Saab Automobile are confident that they will secure additional short-term funding for the reorganization period and are currently in negotiations with several parties about obtaining such funding. Funding for Saab Automobile to exit reorganization has been secured through binding agreements with Pang Da and Youngman as announced on July 4, which agreements are, however, subject to obtaining certain approvals.

As part of the reorganization filing, the court-appointed administrator will apply for the Swedish state’s wage guarantee scheme to allow wage payments to all Saab Automobile employees to be made. August salaries are expected to be paid within a short time frame following the court approval. With regards to outstanding debts to creditors, Saab Automobile will seek the support of its creditors for the reorganization process and is confident it will obtain this support, particularly because Saab Automobile aims at full redemption of outstanding debts.

Saab Automobile has proposed that the District Court appoints Swedish lawyer Guy Lofalk as administrator, who also was the administrator in the successful 2009 Saab Automobile reorganization. Victor Muller, CEO of Swan and CEO and Chairman of Saab Automobile, and the Saab Automobile management team will cooperate closely with the administrator to execute the reorganization plan. The voluntary reorganization process will cover Saab Automobile AB, Saab Automobile Powertrain AB and Saab Tools AB. All other entities, including Saab Parts AB and all overseas entities such as Saab Great Britain and Saab Cars North America, are excluded from the reorganization.

The reorganization plan contains a blueprint of how Saab Automobile’s Management expects to improve Saab Automobile’s business model with an emphasis on an independent, lean and competitive organization. Many key elements of Saab Automobile’s original business plan remain, as Management believes the objectives of the overall strategy remain intact. Through the roll-out of a fully rejuvenated product portfolio, partnerships with Chinese firms Pang Da and Youngman that will ensure access to the world’s largest and fastest growing market, and a strong and global brand, Saab Automobile is well-positioned to realize its objective of becoming a viable independent premium car manufacturer.

Victor Muller, CEO of Swan and CEO and Chairman of Saab Automobile, said: “Since securing the long-term funding through conditional agreements with Pang Da and Youngman, who both support this voluntary reorganization, we have focused on securing funding to bridge the period until we receive their funds. We have concluded that a voluntary reorganization process will provide us with the necessary time, protection and stabilization of the business, allowing salary payments to be made, short-term funding to be obtained and an orderly restart of production to be prepared.”

“While the voluntary reorganization process will no doubt present us with a number of tough issues and decisions, I believe that Saab Automobile will emerge stronger from this process. The potential for Saab Automobile as a viable, independent premium car manufacturer is there, as shown by the rejuvenation of our product portfolio, approximately 11,000 orders and the conditional long-term funding already in place through the binding agreements with Pang Da and Youngman that will give us access to the Chinese market.”

“I would also like to express my deep gratitude to our employees, dealers, suppliers and all other stakeholders who have been so patient and understanding in the past trying months. I realize that we have severely tested their patience, but it has been heartening to see that in general, our employees, dealers, suppliers and other stakeholders have stood by us through this tough period. I look forward to continuing these relationships and collectively start building a brighter future for Saab Automobile.”

Note to Editors:
Saab, or Svenska Aeroplan Aktiebolaget (Swedish Aircraft Company), was founded in 1937 as an aircraft manufacturer and revealed its first prototype passenger car 10 years later after the formation of the Saab Car Division. In 1990, Saab Automobile AB was created as a separate company, jointly owned by the Saab Scania Group and General Motors, and became a wholly-owned GM subsidiary in 2000. In February 2010, Spyker Cars N.V. of the Netherlands, acquired the company from GM as an independently-run business.

Saab cars reflect the brand’s unique Scandinavian design ethic, which is fused with its aircraft engineering heritage. The company is a global premium car maker with a distinguished history of innovation. It is recognized for its pioneering role in turbocharging, as well as occupant safety and the introduction of flex-fuel technology through Saab BioPower. Saab Automobile AB currently employs approximately 3,700 staff in Sweden, where it operates world-class production and technical development facilities at its headquarters in Trollhättan, 70 km north of Gothenburg.

Saab Automobile Press Office
Tel: +46 (0)520 279797

73 responses to Saab Automobile AB Files For Voluntary Reorganization, Saab Automobile Parts AB And Overseas Subsidiaries Excluded

  1. Here we go again..
    Hoping for a more stable future…
    What will happen in these 90 days. Will the factory/ R & D be completely closed and shut down if Reorginization is approved by the court, Or will it function to some degree? Cannot recall what happened in 2009..


  2. I hope this will allow to close the deal with the Chinese and start afresh …
    the employees salaries are guaranteed by the state, I understand …

    let’s hope it is the beginning of a new era, really …

    giffin up

  3. I had hoped for at better and faster solution. Still I hope for the survival of Saab.

  4. So once again VM bought some time :)
    Will it be easier to attract investments this way as the wages are guaranteed ?

  5. I dont think the court will approve for a recounstruction!! This is a joke!! Better to file for bankrupcy straight away instead of draging the brand in the dirt fir a few more month! Let SAAB rest in peace!

    • -1 Not in agreement with your conclusion

      • I might also add that there is no insurance that the chinese can put up the money in 90days since the havent even yet asked NDRC! I cant see any of this being something the court can accept.

        • You are not in the court and that seems good for the decision; however these measures are normal business.
          It can be looked at as a kind of Chapter 11 condition.
          This reorganization will make it easier to get such a protection against creditors.
          Goal is indeed to have more time to find the necessary funds; which in the current time is even more difficult as five to ten years ago.

    • It all depends on the business plan. If the court thinks the business plan is viable then every court will approve the reconstruction. I think this is the best Saab can do under the current conditions.

    • KarlR
      Yet again you show little empathy for those who are actually directly involved with Saab Automobile. Why don’t you take a rest.

      • How do you know what I work with? I can tell u it starts with S

        • KarlR
          If you worked for Saab then you would choose reorganisation over bankruptcy as it would allow your wages to be protected for a few more months. Personally I think you are becoming unreasonable and antagonistic.

          • I dont work for SAAB but with SAAB, And today I would also say unfortantly!! I had it with SAAB and there so called promises!

          • Well as a supplier who is owed money you should also prefer reorganisation over bankruptcy…..

          • @ ANA – I think I understand where KarlR is comimg from… The prospect of reorganization is not an automatic guarantee that suppliers wil be paid, either partially or in full. There is a restructuring plan to be formulated/presented/approved and if suppliers lost trust in SAAB management, they might prefer an assurance of getting 10% now and get this over for good rather than wait for a business plan they might not believe in anymore.

          • Pedro
            Don’t credit KarlR with a sane thought – in my opinion he is ranting and aiming to get a rise out of true Saab supporters.

            Bankruptcy is not good for employees as they would lose wage guarantees and have no hope of a job.
            If Saab goes bankrupt now there is likely to be little left to pick over when the major creditors have divided the spoils…. So reorganisation is the better option for suppliers too.

          • @ ANA – I’m not a supplier, so I really don’t know whether the odds are that a small percentage today is worth more or less than waiting; that is for each supplier to decide for himself. But I also don’t question KarlR’s rationality or sanity, because I’m not in his shoes: I don’t know if he is a freelance employee that is waiting for SAAB to pay or if he has wages to pay to his employees and his company is in need because of this.

            This situation is surely very frustrating and aggravating for all directly involved.

          • Pedro
            It seems like you are defending him from a position of limited knowledge.

            I think it is fairly obvious for the reasons I have already mentioned that reorganisation is better than bankruptcy for employees and suppliers and if you can prove any different then I am listening.

          • @ ANA – At this stage it’s not about proving anything, it is 100% about trust. If I as a supplier think you will not pay me the 100SEK you owe me because I don’t believe your business plan or I don’t believe you as a manager, then for me it is better to bet on liquidating your assets and getting something (as my expectation in continuing to do business with you is not to be paid at all). That’s what I read in KarlR’s words; I know no better than you what his professional involvement with SAAB is, but I fully understand why people may be upset and why they are voicing that.

          • Pedro
            Well I would hope that you can understand why people are upset, that is called empathy, and most normal people have it.
            But you have not even got close to convincing me that employees and suppliers could (under any circumstances) be better of in bankruptcy rather than reorganisation.

  6. I don’t know what to feel right now.

    I really thought that all hard work by VM would lead to a new strong financier and not this. Even if this only is to win some time before “the deal” is presented it will hurt Saab.

    I’m still going to keep my order for my 9-5 SC.

  7. Not the best news, but still is isn’t over yet. It’s now up to Saab UK to generate cash for all salaries, I guess??

  8. A dark day…
    My understanding is that just because they have filed does not necessarily mean that they will automatically be granted reorganisation status by the courts.

  9. It is certainly better to initiate reorganization voluntarily than be kicked into it otherwise. I agree with dave above. Hopefully this will minimize any doubts or hesitation that any potential short term investors may have had so that Saab can acquire that bridge funding and thereby get production rolling while the State covers the August wage shortfall.

    Can someone confirm if Saab is able or allowed to restart production while in reorganization if they do secure bridge funding?

    • Sure if they had money. But they havent. :(

    • Richard
      Theoretically they can restart production if they can get the suppliers to play ball. But in order to do that they need to pay them. and if they have the money to pay them then they would have no need to be in reorganisation.

  10. I do not really know what to think of this. It’s a “Been there, done that”, type of thing.

    I look forward to Saab securing the short term funds and getting the production started again.
    I can also forsee a huge amount of really awful comments in swedish press. I do not read Di anymore, but Teknikens Värld and AutoMotorSport, here we go…
    Maybe I should get a bodyguard? 😉

  11. Wholy macaroni! Her ewe go again. But firstly the court must approve the reconstruction. This time SAAB is in much worse situation then in 2009. IO will repeat what I said few weeks ago:

    If the reconstruction means “leave us alone until the Youngman/Pang Da get OK to buy out SAAB 100%”, then it is OK and SAAB has a chance. Then the Chinese will be able to invest and the company will not have the history baggage. And the confidence both at suppliers and buyers can come back.

    VM has lost all his credibility now, both at suppliers and potential customers. You think that the suppliers will accept to get 75% debts written off this time? They will drag SAAB in the dirt just because they are pissed off at him and I don’t think they see future with VM at the steer-board. To be honest I don’t think I see it either. VM has saved SAAB but the game has become much bigger then he can manage and it is time for him to step down.

    • Iggy, I guess you haven’t read the entire press release…

      “With regards to outstanding debts to creditors, Saab Automobile will seek the support of its creditors for the reorganization process and is confident it will obtain this support, particularly because Saab Automobile aims at full redemption of outstanding debts.”

      • It doesn’t come as a surprise that with this move there is also a lot of speculation.

        Sigh; what, exactly, is it that says that every reconstruction is a blueprint copy of another? What is it that says that they are looking for “debts written off”? And if so, to the same extent as earlier? Nothing.

        The press release says, and I quote:
        “With regards to outstanding debts to creditors, Saab Automobile will seek the support of its creditors for the reorganization process and is confident it will obtain this support, particularly because Saab Automobile aims at full redemption of outstanding debts.”

        It could be that they want to reorganize and secure funding, short and medium, and then pay their debts and get started again. Doing the above mentioned work while protected. Nothing more, nothing less.

        • It may also be the ONLY way to pay somebody (the wages?) without the authorities taking the money first.

        • My thought is that this reorganization will just buy time, time which Saab under the old conditions didn’t had. In the end the unions would have filled for bankruptcy.

          The next three months will be used to secure the Pang Da/Youngman deal, negotiate with creditors and make further arrangements for the future.

      • Sorry, Tim.
        As you probably understand my comment, though I delayed it a bit, is of course a reply to Iggy; more or less the same as your reply. And to all other who thinks that a reorganization = debts written off.

      • Correct; well done

      • Tim, you are right I missed that one. But that is just good intentions. I don’t see that money coming to SAAB with the current constellation. Is has been very quiet regarding the money, creditors, not even a rumor, or very little rumors. My feeling is that nothing has happened, VM and his new friends from Endeavor was maybe running around looking for money but nothing was promised.

        I read in SVD this morning that Youngman/Pang Da support the plan. If this mean “we pay you off and we take over the company after this mess is finished” then I think SAAB has future. Why haven’t they sent the application to NDRC is a good question that deserves a good answer and not just “Youngman/Pand Da is behind the plan”. I think that we don’t understand much about Chinese business. I remember well when there had been rumors that Gelly would buy Volvo, they were almost swearing on their mother’s graves that they would not do that. I think that Chinese people think that it is totally OK to not tell the truth when it is good for the business.

    • I’m not sure that Saab is in a much worse position than it was in 2009. It entered reconstruction then, as a delaying tactic and prevent GM from immediately closing Saab. This gave it more time to find a buyer and secure necessary funding. This time it is again a delaying tactic, so it has some breathing space to secure funding from existing proposed investors, and to potentially seek some new investment. Regrettably I think things were moving too slowly for Saab and this was probably the only card it had left to play.

      I’m still terribly optimistic about Saab, but I think it will still be at least 2-3 years before it finds itself in anything like a comfortable position. Until then we all have to support it in any way we can.

      Don’t write it off yet. Saab is a survivour if nothing else.

      Cowboy Up!
      Griffin Up!
      Saab Up!

  12. It was foreseeable months ago, I am not surprised. The Spyker owned Saab is history. VM will be out soon, and if the brand survives, will be a matter of willingness of the two Chinese companies to pick-up the pieces and the Chinese authorities respective approvals.
    Globally, we are heading into a recession, with many casualties on the road. Banks will tighten credit, short-term funding will not be achievable. Don’t believe one word about more time to find solutions. VM has had his time, he miserably failed, he should be out asap.
    The only solution to save the brand and let it survive, is for a administrator to give the Chinese the full control of the company asap, and let them elect a management that is capable to run a big industrial carmaker. It would inevitably involve paying out the suppliers quite immediately. This should be decided very quickly and not let open for three more months, as otherwise a wave of bankruptcy among key suppliers will come, and any reasonable and capable Saab employee has now to look for his own future, in other words to look for a job at Volvo. The time frame is days and maybe 2-3 weeks, but not three months.

    • michael,
      I’m still trying to understand the why and how, so maybe I’m wrong.
      But why should the Chinese be now allowed to invest(take over) in Saab, if they were not last week?

  13. KarlR – I am not sure if the sky on your planet is blue? To me this seems a logical step to get back to normal. Rinfence everything so that no one can take the company down, restructure to make sure the company is leaner and fitter and come back stronger – what would you rather they do?

  14. Clapping in my hands.
    If Saab will survive, than only with a real bussiness plan and will become an Asian owned company. Get rid of the visionary VM will be a good thing. Saab needs a pragmatic management. So it will be also good to say goodbye to the design director.
    It will be very hard to keep some dealers. And it will be hard to get customers back in the showrooms.
    Sad news.

    • Oh dear, Oliver. What should “pragmatic management” have done over the last 12 months, say? What is it you think VM and his team did not do?

      Let us not forget that the failure of sales to take off happened on JAJ’s watch. GM had done too much damage – in my opinion – already.

      I have no problem criticising VM, but that criticism has to be based upon an objective assessment of what he could have done differently, not just because you don’t like the outcome.

      • I agree.
        After GM:s decision to close Saab, too much time was lost.

      • One thing that VM did wrong was to push thru a build of a Phoenix that costed 100 millions to build that they could have payed the suppliers with!

        • I actually disgaree on that one; Phoeinx, or something beyond SAAB’s adaptation of Epsilon1 used in the current 9-3, was vital and will be vital unless SAAB is to offer only Chinese domestic market cars. One thing I believe VM did wrong at was not seeing that falling below sales targets would severely stress SAAB’s financial structure. I believe SAAB’s business plan was incomplete as, with the benefit of hindsight, it did not allow for any flexibility finance-wise.

          One scenario I see is the Chinese finally seeking approval of their investment and somehow picking up the pieces. By not applying for the investment before and patiently waiting, they effectively choked the company enough to be able to pulverize the current SWAN shareholders in a recapitalization 😉

          • The platform is one thing! But I am talking about the car that was totally unnessesary and just a wast of money!! Nice car but wrong time to do it if you dont have the cashflow as they didnt!!

          • Aha, you meant the show car! Well, in that regard I agree with you even though I understand that they were trying to generate some talk. But yeah, 100 million is a lot of money whether in SEK or EUR or USD…

            I maintain: at this point it’s all about trust. If suppliers don’t trust management anymore, it’s game over at Trollhättan (unless Youngman/PaDang pick up the pieces and move the operation to China to milk the 9-3 for a few more years there). If there’s trust that a business plan can be successful, then money has to show up. Lots of it.

        • 100 millions in what currency? Euros? Drachmer? Yen?

          I do not think that the Phoenix car was so expensive to build. And it was perhaps necessary to have something to show investors. We will find out in a few years when we have the appropriate hindsight.

          • Since SAAB do there financial report in Swedish krona it is of course 100 million sek.

          • Show cars such as the Phoenix are built to show design aspects to the general public and to create buzz around the brand. If a concept fails to gather attention or is badly criticized in an auto show then it could mean it’s back to the drawing board for designers. 😉

            I’d say that investors would most likely prefer to be shown the NG 9-3 as that is what sells and generates money to fund the return on their investment. At least if I was such an investor, I wouldn’t want to be shown pie-in-the-sky designs, I’d want to see a production model design in a computer, a clay model, a running prototype, or whatever.

        • I too disagree … at the time, Phoenix was important in communicating that the SAAB was back, and I doubt that the cost was $100 Million. The investment was also to be amortized as part of the new 9-3 development. Among SAAB’s challenges is communicating to the world that it lives. Here in the states, if you asked 100 people about SAAB, I would bet that 99 of them would list SAAB with Pontiac, Hummer and Saturn as brands jettisoned for the survival of General Motors.

  15. Another bad news day.

    Recently I posted a link about CPP buying 23 acres of the Jaguar Browns lane plant in Coventry.

    CPP were to build the Spyker sports cars for Spyker. CPP are partnered by a certain Vladamir Antanov.

    Let me think, 23 acres is big enough to build a sizeable car plant. Building a big shed building is no big deal (especially with enterprise zone grants), but putting a car production line in the building is quite expensive; unless you can buy a second hand one very cheap.

    Um! V.M.’s and V.A.’s Plan B perhaps?

    Build the Phoenix in Coventry using the production line from Trollhattan?

  16. Well, now the Swedish Government gets to taste it’s own medicine! They werent prepaired to support Saab over the last couple of years, and now they’ll have to pay the workers salaries, adding up to approx. 90 mio SEK every month this goes on!


  17. In 2 words: “the end”
    In 1 word: “fu@k”

  18. Something to think about. During the 90s, at one point, over 2/3 of the domestic airlines in the USA were operating under Chapter 11 protection. Passengers still flew, suppliers still supplied, and most (all?) emerged in the end.

    Reorganisation doesn’t have to be an end. But it will be an end if money doesn’t arrive in order to get things going again. Some might argue that is more likely now, because money coming in won’t immediately be sucked dry in order to settle impending bankruptcy petitions.

  19. .
    Many questions remain….

    Total Saab debt situation is important here. NO COURT will allow a restructuring without proper financed projections. Saab cannot have these in place without solid financial backing, that is not currently available.

    I also do not understand why only certain parts of the company are subject to this situation. Saab GB, Saab Parts AB, etc are all part of Swan [unless they have been hived off seperately] & any other asset that is wholly owed by Saab, should be part of any restructuring.

    VM appears to only by

    • .
      Re: VM appears to only by <<< to follow:

    • I wonder about SAAB GB and SAAB Parts, though in the last case, since that company is profitable, it can sustain itself and does not need to go through a restructuring.

      But I agree that many questions remain. The “this is Plan B” part made me cringe, as did the (visibly annoyed) answer that “there’s a Plan C”, as well as these continuing references to investors from China, to the USA, to Brazil, and to India all so neatly lined up to invest in SAAB… The part I saw on the svt website sounde like more of the same.

  20. :(

    I dont even wanna think what happens when/if the NDRC says no way to Chinese invenstment. At this point Saab needs WAY more money than even the aforementioned can bring to the table and all the while the Saab brand is dragged deeper and deeper in the mud.

  21. Pretty depressing stuff … The bottom line here is that Saab, coming out of the GM rescue by VM, was not able to sell enough cars. The product and the prospect for exciting new products was terrific, as was the enthusiasm, but … the price was too high, there was little to no promotion, and too many dealers, certainly the stand alones, found that they could not survive.

    Another primary issue is trust. Potential customers who were not Saabophiles rightly questioned the future of the company, not wanting to invest in a new car that could not be supported in the future.

    We’ve done our part, having bought a 9-5 last year, and of course making a major investment on emotion rather than logic is never a good idea. But we can’t expect most customers to make such an irrational decision … one which so far I do not regret.

    Perhaps the first step in rebuilding the brand is a thorough review of the 1980’s resurrection of Audi … a premium brand that failed miserably with a very public unintended acceleration problem. Review the details of how the brand was re built. Once the problem was solved, how was the resurrection accomplished? How financed? How long to break even? How was the new Audi re-positioned? How was it priced? What new products were launched? Over time, how was it able to regain premium status that it enjoys today?

    The solution is huge financing, with the expectation of sustaining losses for at least 5 years, but going ahead and developing and launching the new 9-3.

    With that, a solid product line is complete w/ 9-5, 9-5SC, 9-4X, 9-3, 9-3SC, 9-3Conv.

    Pricing and promotion need to be aggressive to get prospects to dealerships to test drive a superior automobile.

    Dealer subsidies need to support early losses to rebuild solid dealer support.

    Advertising needs to tell a compelling story.

    Audi shows us that resurrection is possible … but Saab must be prepared for a long struggle to overcome the hole that it is in.

    • Very well written!

      The billion dollar question is: is anyone willing to invest that much and for that long period of time? Audi took some 20 to 30 years between the Quattro rally cars (to me that was the beginning of Audi being serious in creating an image/brand identity to really move upmarket) and it getting to BMW and MB pricing levels.

      • Pedro,
        I don’t know in Portugal, but in the rest of the iberian peninsula, Audi was a luxury brand already in the ’80. Not to say that nobody did know anything about that US-only fiasco.

        • Well, the Quattro rally cars were early to mid 80s so that seemed to be a nice point to reference 😉
          In the 70s you had cars like the Audi 50:

          In the US (MarcB is almost surely American as he referenced the sudden acceleration problem) it took Audi a long time to have pricing power comparable to that of BMW and MB. It was a long way up and comparing SAAB’s brand perception versus the target SAAB management set itself (and the chellenges that go with it) is in my humble opinion spot on.

          • In the ’70 Audi was something VW had just acquired and did not know what to do with it.
            The Audi 50 ended being a VW polo 😉
            Now the VW Polo has turned into a Audi A1, closing the circle.

          • LOL, that’s true.

            The A1 being just a VW Polo in a smarter-looking suit is one of the reasons I’m not going for an A1 when I trade in the MINI… That and the fact that I find it ugly 😉