Open Letter from Victor Muller to Employees
October 21, 2011 in SAAB Automobile AB
The letter below was sent out through Saab’s internal communication system and was meant for all employees. It was originally written in English and then translated to Swedish. I got hold of the Swedish version and had to re-translate it into english with some help from big G. I hope its ok!
Trollhättan, October 21, 2011
Dear employee,
The events of the past days require a clarification from our side because I can imagine that you are concerned and perhaps somewhat confused. I am very aware of the concerns that the current situation is causing you, not in the least when it comes to your job security and your next salary. Believe me when I say that these things are on the top of our priority list as we deal with the situation.
So what happened? After winning the appeal for approval to enter into voluntary reorganization about a month ago, we set out to work on preparing for the creditors meeting to be held on October 31. However, relatively soon it became apparent that certain individuals in the reorganization process worked with a different agenda, which caused unnecessary media attention. Following a visit to China by the administrator, Mr. Guy Lofalk, news stories came out that Geely was making an offer for Saab whereby our partner Youngman was basically side-lined. That situation was brought under control fairly quickly when Geely withdrew and the financial commitments made by Youngman and Pang Da to Saab Automobile were renewed last week.
Since the voluntary reorganization requires certain funding and it became doubtful whether Youngman and Pang Da would fund Saab in accordance with the plan agreed last week, Swan’s management decided to approach North Street Capital, a US based private equity firm which was willing to provide USD 70 million in funding. We are of the opinion that this amount is more than adequate to continue the reorganization pending an answer from Youngman and Pang Da. However, in spite of the funding commitment by North Street Capital, Mr. Lofalk decided to file for exiting the voluntary reorganization process with the District Court in Vänersborg yesterday. We will contest this application to exit reorganization and file a motion to replace Mr. Lofalk.
The Court will come with a decision at the end of next week and we will keep you informed about the developments, including those whereby Swan may attract back-up funding.
Yours sincerely,
Victor Muller
CEO & Chairman, Saab Automobile AB
Paddan said on October 21, 2011
As a US based commercial litigation attorney, this and the actions taken by Mr. Muller seem like a reasonable course to me. But what do I know?
Talladegan said on October 21, 2011
I note with interest that ‘Mr. Guy Lofalk’ is now simply ‘Lofalk’.
dave said on October 21, 2011
Clear, precise and objective.
Great letter.
Undertaker said on October 21, 2011
Seems that you’re not a Saab employee
dave said on October 21, 2011
No, I’m not. If I were, I think he explains well what’s happening and it’s time that people should know who has been stabbing SAAB on it’s back and it’s time to pay for it.
This is not a matter of liking VM or not. That “guy” was put in charge to find a way for SAAB without loosing the companies identity, not to step on SAABs management whom, although everybody makes mistakes, have done a huge effort in preserving the company as we know it.
He deserves our respect.
He’s got mine !
Undertaker said on October 21, 2011
No salary in time next week du to “country Administrative Board” who should pay salaries uptil 21 okt.
Big suprice? NO
Peter, Sweden said on October 21, 2011
Isn’t the $70 million more than sufficient to pay the salaries?
zippy said on October 21, 2011
Scouring the planet for money to pay wages to workers month on month isnt gonna secure Saab’s future.
ivo 71 said on October 21, 2011
Saab wages = around 11 million/month. Maybe a bit less now since a number of employees have quit lately.
Ivo
TimR said on October 21, 2011
Salaries are paid on the 25th of each month…
MariusGTV said on October 21, 2011
The key to this letter for me is not Guy Lofalk or the monies from NSC but the statement about the uncertainty of the commitment of Pang Da and Youngman to finance SAAB.
There is a very large rat in the room and it’s starting to smell.
GRIFFIN UP! Cuore Sportivo!
Quijote said on October 21, 2011
Here is my spin on the events…
The Chinese aren’t stupid. They want labor on the cheap, and they want companies on the cheap. They realize that without their funds, Saab will die and its assets will be made available via a government issued auction on the cheap. This is when the Chinese will swoop in. Their latest offer, which VM rejected, is probably better than an auction based offer, but probably much worse that the initial terms considering the context of the situation.
Its up to VM to find an alternate resource. Regardless, the Chinese mentality and objective is probably not an isolated one and be likely be repeated by other “white knights”. It looks like a redundant cycle, one who’s spiral is going downward towards extinction. Sad reality my friends. I hope it doesn’t end like this….
ivo 71 said on October 21, 2011
It has been written on some Chinese blogs (have not looked for them, no time) that Youngman offered 1 euro for Saab with the argument that the business is broke anyway and that in this manner Saab could at least be saved.
If true, this is an absolute stab in the back and a violation of the ‘binding’ MoU the three parties (Swan, Pang Da and Youngman) signed earlier vthis year. I don’t blame VM at all that he decided to reject this ‘offer’ and went looking for alternatives.
Ivo
phermansson said on October 21, 2011
Swedish radio had heard a rumour that the bid was about 550 MEUR, 5,5 miljarder kronor.
quickbird said on October 21, 2011
550 MEUR is the money P/Y promise to invest into SAAB, not the money they pay SWAN. They pay SWAN 1 EU for SAAB. What a joke. No wonder why VM declined.
ANA said on October 21, 2011
quickbird
Why is it a joke? Do you think this is a Saab enthusiast site or Victor Muller enthusiasts site?
Khrisdk said on October 21, 2011
Simply because the value of Saab is larger no matter what you think of VM.
And don’t forget that it is the prerogative of the current owner to let the company go into bankruptcy if they choose to deny deals.
If you don’t like that, just show me your cash.
quickbird said on October 21, 2011
Atually I am not a VM supporter. In stead, I think VM should step aside now if he is really for the good of SAAB.
However, for the other side, If Chinese really want to buy SAAB, they should offer a decent price so that VM is willing to step down. This hostile offer, lots of owner would not accept.
But I do believe that chinese can make saab stronger.
ANA said on October 21, 2011
Khrisdk
What an earth are you talking about???
The real prerogative is that the workers and suppliers get paid! So don’t you insult them by saying VM has the right to let Saab go into bankruptcy.
Nate 9-3 said on October 21, 2011
Wow. I have not had any issue with the prospect of Chinese ownership at all during this go-around. However, if this is true, this changes everything. To be “good business” is making a healthy profit and taking care of all stakeholders. Getting something the cheapest at any cost does not make you the winner in my book. You have to make it a great product and you have to do it the right way. If you don’t, then you don’t get my money, end of story.
Tripod said on October 21, 2011
Some months ago, I can’t pinpoint it, June to August perhaps; I think I saw an anonymous quote supposed to be from someone at Youngman that said that they don’t want any JVs etc. that they want the tech (one could imagine that they wanted the tech to better compete with other domestic brands). I’ve had a hard time finding that page, and anyhow it was an anonymous comment, so not much worth. But if something along those lines is the prevailing opinion over there, well, then I wish they will never see any Saab related tech. Misers trying to cut corners have no high status in my book (develop your own bloody tech).
But, as I said, it was just an anonymous comment allegedly coming from someone at Ym, and something that I can’t find at the moment. I would be happy if it’s totally wrong. But 1 Euro is a joke, a bloody joke. Don’t know what they know about reconstructions over there; but it is a joke, if true.
Patrik B said on October 21, 2011
Is it really meant that the public should be able to read the Saab employee information page? http://employee.saab.com/
There are a lot of interesting information there!
KarlR said on October 21, 2011
Not good! Can someone please inform SAAB!!
gunteman said on October 21, 2011
It’s meant to be that way.
“Då detta är en webbsida öppen för alla, distribueras här endast information som inte är konfidentiell.”
Patrik B said on October 21, 2011
Then I will keep reading!
Thilo said on October 21, 2011
Seems to be no secret information there:
“Då detta är en webbsida öppen för alla, distribueras här endast information som inte är konfidentiell”
SaabMan said on October 21, 2011
There have been many comments on this and other threads in the past two days about Victor Muller, Guy Lofalk, Youngman, Pang Da, Geely, Chinese industry, etc. Many have taken sides one way or another. It seems to me that the facts are becoming clearer and in this case Victor Muller is less at fault than others at the table. However, I’m sure there’s plenty of criticism to go around and I wouldn’t go so far as to quote Princess Leia and say that Mr. Muller is, like Obi Wan Kenobi, “our only hope.”
Here are the facts: Youngman, and perhaps to a lesser degree Pang Da, have not dealt with Saab honorably. They have worked to find various ways to undermine their signed agreement with Saab, perhaps with the encouragement of Mr. Lofalk, or perhaps on their own. I suspect it’s the latter, which may be why Mr. Lofalk turned to Geely, seeing that Youngman couldn’t be trusted to uphold the original agreement. In any case, Youngman has failed to provide the bridge financing promised and agreed upon. Then after much pressure they came to a new agreement with Saab on bridge financing, but that, too, seems not to be honored. Finally, they now seek to override the original investment agreement with an attempt to purchase Saab outright for a very small sum. Some have suggested that this is typical for Chinese business practices. I have no way of knowing if that’s true or not. But it certainly seems that Youngman is not a company with which one would want to do business, or even trust. I’m sure Victor Muller feels the same way, but at this point there is no other partner on the horizon, so he continues to hope against hope that Youngman and Pang Da will continue to honor and support the original agreement. However, he probably suspects that that ship has sailed now, and so he is turning to other possible investors, principally North Street. The question remains, however, whether North Street has deep enough pockets. But maybe they just need deep enough pockets to pay off the EIB loan, which then would allow investment by Antonov.
Patrik B said on October 21, 2011
Good analysis
quickbird said on October 21, 2011
“But maybe they just need deep enough pockets to pay off the EIB loan, which then would allow investment by Antonov”
Pay off the EIB so that Antonov can join. He has lots of money….
ivo 71 said on October 21, 2011
VA’s Converse group has reported assets of around 7 milliard US dollars (billion in the USA).
Ivo
gawdlpus said on October 21, 2011
I know they are the anti-christ but go and have a look at TTAC thread about Mr Mascioli and have a look at the only picture that anyone can find of him on the internet. How can anyone believe that he is the saviour of Saab or has access to the millions that are needed to get the company past the 31st?
If the Court sees that photo, Saab/SWAN/Muller are dead meat.
SaabMan said on October 21, 2011
gawdlpus, apparently TTAC doesn’t know how to do a simple google search, since it is simply not true that the shirtless picture is the only one of him online. Maybe you should verify your information before citing the anti-Christ. I just did a google image search and several pictures not very risque come up.
Here: http://racedisplay.blogspot.com/2010/09/alex-mascioli-new-york-city_7362.html
Here: http://www.linkedin.com/in/alexmascioli
Here: http://racedisplay.blogspot.com/2010/09/vikki-ziegler-alex-mascioli-new-york.html
Here: http://www.articlesbase.com/authors/alex-mascioli/631146
TimR said on October 21, 2011
I found lots of photos of him on his Facebook site! =)
fido said on October 21, 2011
i think this will not happen.
i guess maybe the reason is Antonov already invest too much, (the mysterious company behind Mr. Muller when he bought SAAB from GM.)
otherwise, pay off the EIB will be the simplest, Antonov already in.
TonymacUK said on October 21, 2011
But surely the EIB have already made it clear they will NOT accept money from VA, by whatever route he tries to channel it?
gawdlpus said on October 21, 2011
Always happy to stand corrected. Serves me right for believing the anti-christ. I’m quite sure that many heads of companies that are meant to be about to throw a lifeline to a multi-national car maker with a 70 year history and employs thousands of people across the globe, leave pictures like that lying around the internet. I mean it just screams, take me seriously as a businessman.
And while I’m here, anyone know what happened to The Endevour Group?
Anyone? Anyone? Bueller? Bueller?
kid cassady said on October 21, 2011
This is business, unfortunately. I don’t think you can blame the Chinese for seeing a company with essentially no options besides them and then trying to get the best deal possible.
The way I see it, Muller has no choice but to call it a day and sell. The money from North Street Capital is a desperate holdover. The trouble is, whether he is remembered as a savior or as a villain is totally out of his control, and hinges entirely on what PangDa & Youngman decide to do with the company if and when they buy it. If work stays in Sweden, like Geely with Volvo, then he’ll be remembered as the man who bravely put aside his pride in order to keep the legacy of Saab alive. If they buy the company and make it a domestic Chinese shadow like Roewe/MG, then he’ll be the Neville Chamberlain of Swedish automobilia, derided forever by Saab fans who see their badge and technology only on cookie-cutter sedans on Chinese highways. I think Muller greatly fears the second possibility, which is why – in addition to his pride and his personally massive investment in the company – he has refused the Chinese lowball deal and is carrying on in a futile reconstruction process.
Henrik said on October 21, 2011
Perhaps Victors hard tactics have worked, ttela is reporting that Pang Da and Youngman are back negotiating, if we´re lucky they realized that they can no longer get saab thrue Lofalk and return to the original deal.
Edis said on October 21, 2011
If we’re really lucky Muller will realize that it’s over and the chinese will take over Saab Automobile and give it all the resources needs to get back on its feet (we’re probably talking about 1 billion euro over the longer run).
Swedish Automobile have a market capitalization of some 20-30 million euro, the chinese are not going to pay over 200 million euro to get only half the shares.
mike saunders said on October 21, 2011
As “negative” as I’ve been over past few months, I don’t think the Saab nameplate is dead. I’ve said for months that the Chinese would likely let Saab twist in the wind until the last possible second, then move in to grab everything at rock-bottom prices.
It would take Pangda and Youngman decades to gain market traction, but the Saab name and IP are still valuable. There will likely still be a Saab after this, but who knows whether it will still be a mostly Swedish entity, unless there’s some major restructuring of wages.
Thylmuc said on October 21, 2011
This really starts to remind me of Rover. I remember that they too, had ongoing and fruitless discussions with Chinese capital, and then had to go into bancruptcy. After this, the same Chinese company bought what was left over for cheap.
However, it does not seem to work like this. I doubt that a lot of the new Rovers were actually built in China, and also the promised re-opening of Longbridge (?) was a failure. It is much more complicated to build good cars than to have the lines, the machines etc. at some remote place of the Chinese countryside and to put some workers at them.
It really makes not sense to transfer the whole plant to China. Within the given equipment, they can only successfully build cars in Trollhättan. The complexity is close to magic.
kimvette said on October 21, 2011
Or, to summarize the situation ever since GM decided to divest themselves of SAAB cudely but accurately: It’s been a clusterf*** no matter what point of view you take. If SAAB survives given the current news, it’s nothing short of a miracle, because only the grace of god (or fsm
) can save SAAB at this point.
alwaysSaab said on October 21, 2011
Paying salary to the workers is one thing, more importantly is when is Saab going to re-starting the car production process? Saab is not going to survive if it doesn’t manufacture car for sale and makes sufficient returns to keep it going.
Undertaker said on October 21, 2011
You can’t produce without workers means salary IS first priority.
rallyho said on October 21, 2011
But the workers have nothing to work with if there are no components coming off a truck.
This is not quite a “chicken or the egg” proposition.
Give even me, a pile of parts and sooner or later you will see a car. Give a thousand workers an empty factory and what will you get?
Remember, like him or not, Henry Ford controlled EVERY COMPONENT in the vehicle. Yep, right down to the forest for the wood products were owned by old Henry Ford. And each and every American has eaten a burger or hot dog cooked on Kingsford charcoal. That is right, even the shavings were compressed and made into cooking fuel hence the name kingsFORD.
alwaysSaab said on October 21, 2011
Mr Lofalk appears to be more a liquidator than someone with a mission to source for immediate liquidity for Saab until at least after any longer term financial commitment is secured. You are appointed to keep the ship afloat and definitely not to let it sink faster! What a shame!
quickbird said on October 21, 2011
Perhaps it is just a strategy to push VM away, who knows… But definitely this strategy is highly risk…
skwdenyer said on October 21, 2011
Of course, NSC could be a front for VA
(dons tin-foil hat…)
fido said on October 21, 2011
maybe
TimR said on October 21, 2011
its not…
scand said on October 22, 2011
What IS North street capital exactly? Of all the funding sources in the world, why did VM approach an entity with a one page, vague website, that operates out of a virtual office, and apparently got formed 3 months ago?
Is he just a rich kid with an Etrade account? Investing grandmas money? Does he have millions, tens of millions, billions ” under management”?
I had wondered the same as skwdenyer, frankly. Whatever it is, it’s pretty murky I think.
rallyho said on October 21, 2011
As a former US based investigator, one of the thing I have learned is that most statements contain a mixed bag of things that are true and things that are not. But what do I know?
I do know that when I can’t follow the action because the “business activity” is closer to a New York City street hustle like “Three Card Monte” something is amiss. I know he looks like a cherub and all but even my long gone Mother would question the company I was keeping. Tich, tich, poor Saab and poor us.
Focus on loyalty? As a long, long time customer, I have been supporting Saab for twenty five year now. hence the poor us comment.
Heck it could have been that China (at large), wants out of the main body of the deal. They could look at a decline in the traditional markets and know that this is too great a risk. How much technology was in that prototype? How much was in the old GM designs? Perhaps when they looked at the old horse it was a bit “long in the tooth”. Geely said Sweden approached them and they went as a courtesy, did Lofalk go on his own initiative? That, is rare in government. That, is very rare.
mike saunders said on October 21, 2011
That’s a very intriguing take on it, and you’re right about the questions outstripping all the answers provided by any side in this deal.
Did Lofalk make the trip to China because he wanted unfiltered information straight from the potential investors? Did he want to gauge for himself the level of Chinese commitment to the existing deal? Did he talk directly with NDRC officials about the chances of approval going forward?
rallyho said on October 21, 2011
Mike, he had to unless of course he was cutting a side deal perhaps with the eye to retirement.
I have seen that done a few times.
A career civil servant would NEVER take such bold initiative and board a plane for China unless he was told to.
As a short term political appointee he may have been hired for just that reason however. Who pulls his strings?
The initial response said in essence that the Swedish government approached Geely and they entertained the meeting as a courtesy. Who in Sweden? Is it worth the risk to Lofalk to risk potential criminal counts if he was “running a side game” and was caught? Did he feel he had enough protection to dance between the legal raindrops?
Sorry, I realize that being in the US, I know nothing about the Swedish laws but all of this has to have some folks looking and looking hard.
ivo 71 said on October 21, 2011
Guy Lofalk is not a civil servant but an attorney-at-law specializing in bankruptcies and such. He is appointed by the Court to supervise the VOLUNTARY reconstruction of Saab and as such has considerable freedom of action,always within the parameters of the law, of course. It can be more or less compared to a defense barrister in the UK who is asked by the Crown Prosecution Service to act as a prosecutor on ‘the Queen’s behalf’.
So he could, and may very well have executed a bit of misguided own initiative, perhaps because he really wanted the Saab soap to end or perhaps because he wanted to go down in history as the guy (Guy
) who saved a Swedish industrial icon. No idea. But what he did (if he really did it), no matter what his intentions were, was totally against Chinese business etiquette. By approaching Geely he not only made Youngman lose face (by making publicly clear that he, Lofalk, the man who now holds the sceptre at Saab, preferred others to Youngman) and alienated the all-powerful and all-mighty NDRC who had selected Youngman to deal with Saab and most certainly doesn’t like to be challenged by some bankruptcy lawyer from Sweden.
For what it’s worth: I believe that mr. Lofalk (with good intentions or bad, can’t judge that) thought to be able to come up with the final solution for Saab, went about it in the -in China- clumsiest way possible and achieved exactly the opposite of what he intended. By making Youngman lose face (deservedly, by the way afaik) he actually, if not legally perhaps (but just try to litigate in China…), released Y/PD from their obligations under the previous MoU with Swan (remember that remark by the Pang Da boss about the ‘changed situation since Saab went into reconstruction’?) and so facilitated that infamous 1 euro bid which, as everyone concerned could have told mr. Lofalk before, couldn’t be accepted by Swan and so wasn’t.
I repeat: this is nothing more than my own take on things, based on what is currently available from public sources. It may very well have gone in a totally different way but I guess we won’t know that anytime soon, if ever.
Ivo
Khrisdk said on October 21, 2011
I personally like your take on it.
rallyho said on October 21, 2011
Thanks Ivo, that puts him in better perspective.
Here we might refer to him as a “Special Master”.
hughw said on October 21, 2011
Obviously, except for the few trolls here and a few others that have given up hope, we’re all looking for the best outcome for Saab, whether it be with or without VM. From the outside, we really have no way to know what people are really like and what there true motives may be. VM may be a charlatan, and is finally getting caught in the spider’s web; he may only have the best of intentions, but events got beyond his control; he may be a business genius who can pull the chestnuts out of the fire — we simply do not know. Guy Loflak could be an honestly intentioned lawyer trying to carry out the law as best he can; he may have other agendas — again, we just don’t know.
From watching other negotiations, whether it be trying to avoid a subway strike, or come to a federal budget agreement so the country can pay its bills, there’s always a lot that we don’t see while it’s happening and sometimes never know. From watching movies like Working Girl with Melanie Griffith and Harrioson Ford, we see business deals turn on a dime for one reason or another. I’m afraid that this will not be something that we can read the tea leaves about, and we will not really know what’s going to happen until it happens. So sit back and watch the movie to the end.
One other thought about VM. He would be nuts not to care about his own financial future. He certainly does not want to be ruined, but how does this goal hurt Saab. If he can bring in the capital and partners to make Saab a viable entitiy and enrich himself and his shareholders in the process, more power to him. If he can’t, and he is forced out or bought out for a token amount, I can’t see how Saab is any worse off than they would be if he walked away today. So fight on, Victor!!!
MarcB said on October 22, 2011
Interesting stuff … Here’s how I see it!
1. VM’s business plan was based on a volume ramp up that would generate a level of cash flow.
2. The ramp up fell way short, and the cash did not materialize.
3. The volume problem had nothing to do with the quality production, but much more to do with the perception that after the GM sell off, Saab was either one of the shut down brands, or was in a precarious position financially, scaring potential customers away wanting service and warranty in the future.
4. Youngman and Pang Da offered much more than an investment large enough to restart production. They offered a vast untapped market where Saab could be launched as a new vehicle with no baggage. Once the volume is established, with stakeholders paid, VM could get back to the execution of the business plan with investments in new cars and in marketing to put recent bad history behind us, and rebuild the integrity of the brand.
5. Yes, Youngman and Pang Da may now be maneuvering to lower the price of entry, and their hands may be tied by the Chinese Government in this effort.
Bottom line, kids, Youngman and Pang Da appear to be Saab’s and our only hope, regardless of price, and they know it. The question is the degree to which Saab changes under Chinese Management … and you thought that GM was an unfortunate owner.
Good luck to all stakeholders. For those of us passionate long term customers, while I hope against hope that I am wrong, it’s been a nice ride.