My Two Cents on the Subscription Agreement Termination

As Saab entered reorganisation we thought this would allow things to run smoother. But in fact the opposite has happened. It’s just getting weirder and weirder. The Chinese deal, that seemed to stand rock hard started to crumble into dust over the last few days. Yesterday Swan announced in a press release that the subscription agreement with Pang Da and Youngman was terminated. Here is my view on this.

The reason why this happened is quite simple. Swan and their Chinese partners had an agreement that they would provide the bridge financing for reconstruction which quite obviously didin’t happen. On the contrary, Pang Da and Youngman offered to buy 100% of Saab leaving out Swan. That offer was declined by Swan who then asked the Chinese to confirm that they would stand by the earlier agreements. Obviously that has not happened and Swan had to react. So much for the simple part of the story…

Most of us found that offer of 200 million Swedish crowns for Saab pretty low. But for Pang Da and Youngman it would not end up there. A rough estimation would be that they buy at least 400 million Euros of debt (EIB, suppliers, several convertible loans) together with the company. So to get things up and running again they would have to put a lot of money into Saab.

Some may say that this is just about getting the technology to China without keeping Trollhättan alive. But I doubt that it would be that easy. The current cars (and on a personal guess even the next generation that is under development right now) all heavily depend on GM tech. And I can imagine that GM put something into the contracts that the use of their technology for example is linked to the existance of Saab as a Swedish company. Technology like the eAAM stuff is in a seperate company so if they wanted access to that they could have it much easier and maybe even cheaper. It just doesn’t make sense.

Trying to force Saab into bankrupcy also makes no sense for Pang Da and Youngman because this would most likely void most agreements Saab has. The name rights just for starters. It would even complicate the real estate situation as most assets are collateral for something.

So right now it looks to me as if Pang Da and Youngman made this offer they knew Swan would decline to get out of the current deals. They more or less force Swan to terminate the agreement without having to do that themselves. If they want to gain new negotiations or exit the deal is not clear, could be either one. But regardless of the intention it leaves Swan in a pretty difficult situation at the worst possible time.

From the indications I got North Street Capital might be able to fill that part and to bring in enough money to get through reconstruction and to get Saab rolling again. It’s not over yet but this may be tighter than everything we have seen since GM started to shut down Saab. I still have faith that things will work out but right now it all depends on getting a new agreement as soon as the middle of this week.

Tough, but we have seen even more unbelievable twists in this rollercoaster. Wait and see, keep calm and carry on – but you already know that.

TurboLamko
Member
4 years 11 months ago

Very good writing 🙂 It was worth reading. Hope they solve it somehow…

Thylmuc
Member
4 years 11 months ago
Interesting thoughts! Somewhat off-topic: What is going on in the automotive world? One gets the overall impression that “individiualism” has become such an important aspect in selling cars. The number of models increases, the number of options on each model alike, luxury cars and several exotic brands are booming.Yet it turns out to be just so difficult to sell cars from some previous high-profile brands. Saab is not alone in this situation. Have a look at Alfa Romeo. At the end of October, the production of the 159 will be stopped. A replacement has not officially be anounced, and the… Read more »
hans h
Member
4 years 11 months ago
Yes. I have noted this. It’s as if only “the Germans” are allowed to build cars in Europe, All the other seems to be on the verge of giving up, being forced to close or “something”. The Chrysler-Lancias are an abominable example of the latter. V8? Rear Wheel Drive? In a Lancia? See how the VW Group are trying to be some kind of European General Motors, or “Allgemeine Autos”. And every individualist in Europe sitting in their dark BMW 3-series, screamin “I am unique” in sync. How did BMW sell this image to the public? Nice cars, but not… Read more »
fido
Member
4 years 11 months ago

because both of Alfa Romeo/SAAB slow to respond to the changing world, They live in the past glory, they change too slow.they must learn from Germans.

Fiat also a big loser in china market, like SAAB.

gannet
Member
4 years 11 months ago
It is over. Deal with that. Damage done in last few months on trust, image and reputation can not be solved by some financial fixture. It would take years of work (means producing, coming with new cars, selling – none of it is happening and does not seem to happen any time soon). And Saab does not have time. Leverage between how much money would be needed to get Saab back to “normal state” and Saabs ability to make money when it is in “normal state” has become totally unfavourable towards any positive view. Here in CZ, 9-5 is rarer… Read more »
robban
Member
4 years 11 months ago

Defeatist. It isn’t over til it’s over. And that’s a fact, compared to pretty much everything you just wrote. =)

AngryEngineer
Member
4 years 11 months ago

The only thing that is certain is that nothing is certain. No one knows how this will turn out. Predictions can be made, but it’s not over until it’s over. Let’s wait and see.

UWb
Member
4 years 11 months ago
This is life, some brands will come and some will go, we are not living in a static world. Coming to the latest situation, the situation is as follows. VM has large debts in his engagement with SAAB, the Chinese offer will not cover those debts which will leave him in a difficult situation financially – of course it is clear that he (because he represents SAAB in this case) cannot take this offer. He could argue that GM have different agreements that will be followed etc, certainly true but as with everything else, all things are up to negotiations… Read more »
ANA
Member
4 years 11 months ago

+1

Jeff
Member
4 years 11 months ago

It appears the Chinese are truly out, UWb and your +1.

Ralph
Member
4 years 11 months ago

I think that with cars, true image and reputation damage comes from things like large scale recall actions, models that have serious mechanical flaws or from a series of car designs that just don’t relate to the brand (nor to anything else). A temporary production cease is still less significant than those things, not to mention the company’s financial difficulties, which may even be better understood and accepted in economic times like these. Of course I’m talking about the general public here.

Trued
Member
4 years 11 months ago

You could have bought a “previously-owned” 9-5 with low milage. Its a matter of having the Saab soul or not. We need to bring in the Spanish inquisition to deal with those who are not faithful. 😉

sportwagon28t
Member
4 years 11 months ago

really good post, puts everything in perspective.

Viper
Member
4 years 11 months ago

So now begins the next chapter in this mega saga. Although to me the only acceptable outcome is that Saab lives on. The other outcome would be unacceptable. All it would mean is that there would be less classy cars on the road like Saab and more boring lame cars like Holden (GM) on the road. What despicable thoughts.

900 classic cab
Guest
4 years 11 months ago

What you wrote makes perfect sense, nevertheless we’ve seen some crazy stuff going on. Just like that song: “All we can do, is sit and wait” 🙂

DUTCH900C
Member
4 years 11 months ago

How sad it is, but i don’t have any trust anymore that SAAB will be saved.
I have belived in SAAB, for many years, just as i did in Victor Muller and a good solution for the current situation, perhaps is the past situation better, but i can’t belive anymore for a good future for “our” brand.
In my opinion is there no more future for SAAB and because of that: SAAB(factory),R.I.P!

ANA
Member
4 years 11 months ago

Till
Good to see some analysis. Personally I am not too concerned with headline value of the 200 Million SEK offer, what I am more interested is the amount of investment that the Chinese would be prepared to put into Saab if they did own it and also when they can secure the deal and put funds in Saab’s accounts. I am keen that we get a suitable new owner and that it is properly funded this time.

ante
Member
4 years 11 months ago

According to svd.se: 200 MSEK purchase, 1300 MSEK for repaying debts to subcontractors some undisclosed sum for liquidity (the rest?) totalling 5500 MSEK! That’s a decent sum to start with…

Motoradd's Cat
Member
4 years 11 months ago
Oh dear here we go again. Just a thought, but maybe Pang Da and Youngman don’t want the Saab name, the Factory or the Phoenix platform. Maybe they just want the production line and ship it to China to build whatever cars they want to build. If it is one of the most flexible lines in the world then to the Chinese that is a great asset. Pang Da and Youngman have been playing a long game of dangling the carrot in front of the horse. In the end the horse gets tired and quits. Sadly I have seen this… Read more »
Thylmuc
Member
4 years 11 months ago

methink Rover is a good example. The lesson learned here for Chinese companies should be that it just doesn’t work like that. A car manufacturer is a complex thing that includes a lot of factors, and transferring parts of an assembly line and tooling to a different place does not work without hickups.

TurboLover
Member
4 years 11 months ago

+1

michaelb
Member
4 years 11 months ago
Just losers!!! I think your guess is wrong. It is explicitely written in Swan’s statement, that discussions with the two Chinese companies are ongoing. No need to waste a second for discussions in such a tight situation for Swan, if VM would think, things have completely changed from the other side. On the other hand, Swan had to cancel the binding agreement, in order to be able to negotiate with third parties about a significant participation. I think, the two Chinese companies wanted to change terms and abuse the critical situation. By doing so, the two Chinese companies played an… Read more »
fido
Member
4 years 11 months ago
I believe Mr. Muller lost the trust of chinese first. because when production line stop early this year, Pang Da & Youngman sent 58M euro as prepaid cars. then many media ask Pang Da & Youngman, why they sent to a company almost going bankrupt. what they answer is:According to their understanding of Saab’s situation is not so bad, just a little difficult. they trust SAAB will restart production soon. and the first 9-5s & 9-4xs will arrive china at October this year. same thing happened in Huatai Auto, They signed as a partner, and go to visit the factory,… Read more »
michaelb
Member
4 years 11 months ago

Even if so, their behavior is completely foolish. We are not in plastic toys industry for children, or low quality textiles for the broad mass, but in high-tech carmaking for well-educated customers.

fido
Member
4 years 11 months ago

the decision of change to 100% direct own SAAB instead of 53% SWAN.Certainly well thought out.
Maybe this is only way to get NDRC approve.
NDRC has been warning all manufacturers that interested on SAAB, SAAB has a very, very high investment risk.
If 100% own can get approved, like Geely, i think Youngman / Pang Da has no other choice.

Chinese have a saying: 箭在弦上,不得不发.

don’t worry about SAAB quality if Youngman take over, it will continue improve to higher level.

michaelb
Member
4 years 11 months ago

It is not about 100% ownership, that is okay. It is about procedure and behavior, how to launch that.

fido
Member
4 years 11 months ago
@ michaelb from my view as a chinese,i think maybe they get signal from NDRC, that if they can’t get 100% SAAB, then the investment will be rejected. there are few applications rejected by NDRC directly. e.g. the case that Tengzhong from Sichuan province want to take over Hammer from GM, NDRC didn’t reject Tengzhong, NDRC just tell media they don’t received the any request from NDRC, it looks like Tengzhong canceled the application. but as chinese, we known Tengzhong must contact NDRC officers through various channels, and get NO from them. then Tengzhong canceled the request. things works in… Read more »
michaelb
Member
4 years 11 months ago

fido, answer to your point below:
If so, and that is entirely possible, , that authorities said no partial ownership, then you call VM first and explain it to him, instead of dealing behind his back, and you offer a premium, not much less. If under the old agreement PangDa / Youngman paid something above 4 EUR per share, then you don’t offer 0.8-0.85 EUR per share for have full control. Ridiculous.

fido
Member
4 years 11 months ago
michaelb i think they must talked to VM already, but get NO from him, because VM has PLAN B & PLAN C. NO from VM & NO from NDRC, no hope for their project, so when SAAB go to reconstruction, Mr. GL visited china meeting them and NDRC, GL told them the real situation of SAAB, they see the opportunity to complete their project, so tell their PLAN B to GL. it’s all about business, understandable, both sides are try to protect their money. There is an old proverb in China: 成功需要天时 地利 人和. in english, means a success needs… Read more »
Pedro
Member
4 years 11 months ago

@ fido – Doesn’t that mean a lack of proper due dilligence for all of this time? Wow… I can understand that at first when the prepayment was made, but Pang Da & Youngman should have conducted extensive due dilligence by now…

Pedro
Member
4 years 11 months ago

…Or perhaps they did and decided to go all for nothing as a bailout strategy.

skwdenyer
Member
4 years 11 months ago

Without knowing who might be ‘lurking in the wings’, but I wonder if now might not be the right time to issue some teaser shots of the new 9-3? Or at least some shots of disguised prototypes driving around to show that there is something tangible?

gustaf
Member
4 years 11 months ago

I’ve got 2 cents as well:
If SAAB some how manage to get of of this one, all hope is set on the 2013 9-3. Think twice before continuing this journey It’s all about keeping Scandinavian design and the SAAB heritage. Phoenix is 100% none SAAB DNA, I’m afraid.

On topic: I too suspect the Chinese is running a Rover game. However if nothing else materializes, what option SAAB got? One could dream about a western investor but surely they should’ve already came forward if that was the case.

rune
Member
4 years 11 months ago

It has been said that the 9-3 built on the Phoenix platform doesn’t look much like the PhoeniX concept, except for maybe some pieces of the front.

Toby K
Member
4 years 11 months ago

I have heard it looks like a heavily facelifted og9-3 with a Phoenix front end-a slab sided 9-5 type mid section (much door, high window line etc) and a raked convex rear hatch section with a large amount of glass. it looks low and sporty like the newer cars seems to (think A5, Jag XF etc) think more sports than hatch.

if that is true. then I really want to buy one…the question is will the line ever start.
waiting for something that may never happen that sounds this good (like the saviour of Saab) is torture indeed..

MK
Member
4 years 11 months ago

I’ve seen it and the only thing I can say (can not say more than this) is if I had the money and we could get a chance to build it I would buy one! 🙂
It looks great!

fido
Member
4 years 11 months ago

Wow, you are so lucky!

fido
Member
4 years 11 months ago

the aero x was designed by Anthony Lo, i am very proud, he is a chinese, from hong kong.
aero x, 9-x bh, 9-x air are my favorite cars, i hope one day, they can go to production, but it seems impossible.

he went to Renault as VP of exterior design.

hans h
Member
4 years 11 months ago

The 9-x Air is a fantastic car. I have seen it – at the museum. I hope it will stay there instead of being sold.
Unless they build it, that is. 🙂

fido
Member
4 years 11 months ago

Wow, people can buy 9-x air from museum? sadly i don’t have that money.

hans h
Member
4 years 11 months ago

As part of the bancrupcy preparations all cars at the museum has unfortunately been seized by the enforcement authority. I do not think any cars will be sold separately if it comes to that. You probably have to buy the whole museum.

ivo 71
Member
4 years 11 months ago

Only if Saab goes bankrupt or becomes totally insolvent. Then, maybe, the Saab museum collection will be sold or auctioned off. But it is improbable, there are initiatives underway in Sweden to prevent this from happening and to keep the collection intact.

Ivo

Troels, Denmark
Member
4 years 11 months ago

I agree! 9-xbh and 9-x Air are among the best car-designs, ever made!

TurboLover
Member
4 years 11 months ago

Agreee! Anthony Lo is the best thing that happened to Saab since Sixten Sasson!

scand
Member
4 years 11 months ago

My prediction for the hours and days ahead:

VM goes to the courts and plays ‘Russian roulette’. Either you let antonov in and save the company, or YOU , swedish judge, are solely responsible for saabs death.

USAaber
Member
4 years 11 months ago

(NOTE: Satiric comment)
Sell the whole Saab story to the screen writers for US TV! It could become a whole new Sunday night “drama/soap” like PanAm, The Good Wife, etc. The story has everything (except sex? But I am sure the writers can squeeze that in somewhere…). Exotic milieus (Trollhättan… Beijing… Amsterdam… Detroit…), jet-setting between continents… hard negotiations… vintage cars… sports cars… high tech development… sneaky government officials… media hounds…
What else can prime-time TV ask for?

TurboLover
Member
4 years 11 months ago

What did SWAN stand for now again…?
http://www.urbandictionary.com/define.php?term=swedish+automobile

= It is already squeezed in!

M.A.
Member
4 years 11 months ago

Will it have a happy ending, or an open one?
Once thing is for sure, there a plenty of villains in the story. 😉

Pedro
Member
4 years 11 months ago

Sex 😛
(Note: satiric reply)

hughw
Member
4 years 11 months ago
there’s another not very good reference in English regarding SWAN SONG. See below: “Swan song” is a metaphorical phrase for a final gesture, effort, or performance given just before death or retirement. The phrase refers to an ancient belief that the Mute Swan (Cygnus olor) is completely silent during its lifetime until the moment just before death, when it sings one beautiful song. The belief, now known to be incorrect, had become proverbial in Ancient Greece by the 3rd century BC, and was reiterated many times in later Western poetry and art. Let’s hope that this swan has not sung… Read more »
skwdenyer
Member
4 years 11 months ago

According to some reports, a ‘crisis meeting’ is going-on in Stockholm between Saab/SWAN and YM/PD. See http://www.brabantsdagblad.nl/algemeen/economie/article9733741.ece for instance.

phermansson
Member
4 years 11 months ago
spacy
Guest
4 years 11 months ago

.
Sadly this situation probably stems from Mr. Lofalk’s discussions with Geely, that was reported here, a week or so ago.

YM/PA, obviously see that a deal could have been done with the Administration & said to themselves, why not us…… Hence go for the throat, which is exactly what they have done.

Most business people of any worth [sentiments not included] would sit & wait till the pack of cards collapse & pick the bits up for close to nothing…..VM must have known this was a likely outcome.

JB
Member
4 years 11 months ago

Why no opinion from Swade? His would be insightful.

Iiari
Member
4 years 11 months ago

He has a quite personal and detailed account of his opinion and feelings on Inside Saab.

phermansson
Member
4 years 11 months ago

TTELA just updated the story, they’ve talked to Müller:

– It was totally unacceptable. Not only because of the sum, but also because of the conditions. Everything but the Messiah would come back was on the list of things that would be met in order that they would pay. So we would never have seen any money, said Victor Muller, confirming that the offer was at around 200 million.

– There are ongoing discussions between including lawyers to see what solutions exist. I will personally not be in until the conditions exist for a business will really take place, says Muller.

michaelb
Member
4 years 11 months ago

Sounds the two Chinese owners are real crooks.

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