Youngman and Pang Da say agreement is still valid

Reuters reports today that Youngman and Pang Da think their agreement with Swan is still valid:

Pang Da Automobile Trade Co and Zhejiang Youngman Lotus Automobile Co said on Tuesday their equity agreement with Saab’s owner was still valid, a response to the Swedish company’s move to end the deal.


And further on:

In a stock exchange filing, Pang Da said it had never signed any bridge financing pact with Saab’s owner, but said it still intends to honour its equity investment obligations, including seeking Chinese government approval.

“The company has been exploring various options favourable to Saab during its restructuring process. But, before any new agreement is reached between the parties, we think the previous pact remains legally binding,” Pang Da said.

Pang Da, which had already paid 45 million euros as part of a separate car purchase deal with Saab, had made provisions to cover the amount in case the automaker goes bankrupt, it added.

In a separate statement, Youngman said it already paid an $11 million bridge loan in line with an earlier agreement along with its share of the payment for Swedish Auto shares, which had kept Saab afloat.

The company did not give an exact figure, but according to its proposed equity agreement, it was committed to pay 136 million euros for a 29.9 percent share of Swedish Automobile.

It was not immediately clear whether those funds could be retrieved in the event Saab was forced to liquidate.

Youngman said it regretted that Swedish Auto had on its own declared an end to the legally binding equity pact, but added it remained committed to its own obligations.

“Just as we have indicated to Swedish Auto and Saab many a time, we are willing to continue helping Saab (and to) provide short-term and mid-to-long term funds through other means,” it said, adding it is open to further discussions among the parties involved.

Of course I have to add my few cents on that.

First of all I think we have to look at Pang Da and Youngman seperately. Pang Da executed their financial help for Saab by ordering cars and paying those in advance. So when it comes to the latest bridge financing agreement they seem to be a bit out of the picture as it was not up to them to send money.

So those promised 70 million Euro bridge financing should have come from Youngman, who say they already paid $11 million (approx. 7,9 million Euro). My guess is that their point is that they paid at least a part of the promised sum so the agreement is valid. Given the delicate situation Saab is in this delayed payment could well be seen as an attemt to push Saab in a position where Swan may accept a 100% takeover bid for Saab. That did not work so in the light of another investor (NSC) showing up they return to the original plan claiming that they want to fulfill all the obligations because they don’t want to loose the deal completely.

To really judge this you would have to know the complete text of those agreements and if they are valid or not is surely is one of the main topics for the talks going on.

di.se reports that they learned through a source that NDRC will only let Pang Da and Youngman negotiate with Saab:

At the same time indicate a source for newspaper Dagens Industri that the powerful Ministry of NDRC in China will not allow any other Chinese companies to enter the Saab.

“NDRC would lose credibility if you allow another Chinese company to negotiate the Saab Automobile. The Department has made its choice after a comprehensive analysis and the decision is taken upholds, “said the source of the Di.

I know, that di and an unnamed source but to be honest this is no big news we always expected that to be the case. For Pang Da this is really a bad position because their aim always was to be the sole importer for Saab in China and from watching the way the story has been unfolding I would imagine that the 100% takeover bid was mainly driven by Youngman, who would benefit more from owning Saab. Some days ago I read somewhere that Pang Da claimed it was Youngman who were slowing down the process at the NDRC. But they are tied to youngman.

But again, that’s just my personal view.

However, it is crucial that Saab gets financing in. From the same di.se article:

On Tuesday, Saab will pay salaries to some of their employees. The greater part is covered by the state security, but not all. According to Guy Lofalk there is nothing left in Saabs accounts.

Sure, that’s the reason why Saab needs the bridge financing. So let’s hope we see a positive press release today.

NC
Member
4 years 11 months ago

Wasn’t it mentioned somewhere that the advance payment for the cars could be received by Saab conditional to them restarting production? So, were the only funds Saab received from the Chinese parties that portion of the bridge loan?

thor
Member
4 years 11 months ago

UPDATE 1-Pang Da, Youngman say JV deal with Saab still valid
Related News
Tue Oct 25, 2011 2:14am EDT

* Youngman says bridge loan, other payments already paid

fido
Member
4 years 11 months ago

i’ve read the announcement from Youngman.
it says. 13/10 Youngman & SWAN signed a supplemental agreement for the bridge loan (signed in 11/10), that change the loan from 70M euro to 11m USD, they already paid the money.

they also paid for the share of B company that JV by SWAN & Youngman.

moose
Member
4 years 11 months ago

We’ve heard the story from Saab’s/VM’s earlier. Now we heard PangDa/Youngman’s side.

The truth is probably somewhere in between…

ivo 71
Member
4 years 11 months ago
So, to sum it up, from what has been made public now it looks like Pang Da acted correctly and lived up to their part of the deal. It’s Youngman who have tried to force a 100% share takeover by first withholding the 60 million of the bridge finance deal and then, when Saab got into even more trouble after that, tabling a proposal that would bypass the current owners of Saab (and bankrupt VM in the process) by offering a laughable price for the share capital of Saab only. I would appear they did it in the wake of… Read more »
Khrisdk
Member
4 years 11 months ago

Sounds reasonable.

christian
Member
4 years 11 months ago

+1

Tripod
Member
4 years 11 months ago

I agree Ivo; that has been my impression as it has unfolded over the weeks.

I think at some point it was mentioned that Svan/Saab had said that they didn’t need all of the bridge loan at once, but clearly small sums, 11 MUSD in total, is far from what has been mentioned (in public), the 70 MEUR.

(Also, it has been mentioned that Svan is bound by an exclusive agreement, which says that they can’t negotiate with anyone else than Youngman and Pang Da until 15 November; what is up with that?)

ivo 71
Member
4 years 11 months ago
So, as fido reports, Youngman now says that the bridge support agreement was changed in the sense that it was reduced from 70 M to 11 m and that thay have diswcharged their obligations so that there is no reason for Swan to terminate the original agreement. The other version is that the bridge support deal was amended in the sense that the 70 M wouldn’t be transferred as a lump sum but in portions or paid as needed so that Youngman didn’t fulfil their obligations. It sounds plausible since this was in the pre-reconstruction period when Kronofogden threatened to… Read more »
ivo 71
Member
4 years 11 months ago

Excuses for the typos, hurried posting… accuns = accounts.

Ivo

Allan B
Member
4 years 11 months ago

+1

twirix
Guest
4 years 11 months ago

Yes the Chinese played it well, they have an exclusive agreement so they can just sit and wait til Saab goes bankruptcy and then buy the pieces for whatever they want to pay. Without getting the debts and all the mess.

ivo 71
Member
4 years 11 months ago

Another bit of BS. Let’s not even react to this flaming.

Ivo

ANA
Member
4 years 11 months ago

I disagree too, but let’s face it no one can be 100% certain of anyone’s motives so I think twirix has a valid point of view and one that should not be shot down in flames.

Nate 9-3
Member
4 years 11 months ago

I feel that this is close to the truth. I have no interest in SAAB partnering with Youngman. Sorry, Pang Da – you seem decent. Get a new investor in and pay back the Chinese companies. Youngman can go ahead and come up with the technology on their own rather than buying it on the cheap. There is no honor in your actions, Youngman.

900 classic cab
Guest
4 years 11 months ago

As some have written before, it seems that Youngman was only after the technology. I remember when there were doubts about the intellectual property ownership on the phoenix platform. Anyway, if the court doesn’t allow the reconstruction, all these well intended scenarios will worth zero. It would be great to hear something from the NDRC also.

ivo 71
Member
4 years 11 months ago

The Dutch radio station Radio Nederland Wereldomroep reports (no link, sorry, info was posted on Dutch Saabforum) that the Chinese authorities have now forbidden Y/PD to transfer any more money to Swan/Saab. That may also include the remainder of the 70 million bridge financing that Youngman so far reneged on. However, there were no sources given for confirmation so this may just be another uninformed evaluation of the situation by some less than expert journalist.

Ivo

900 classic cab
Guest
4 years 11 months ago

But if it’s true, what happens next ? will it be the end ?

obelix
Member
4 years 11 months ago

If true, it might also be: don’t transfer any more money before we (NDRC) have come to a decision.
Because the more money is being transferred, the harder it will be for them to say No.

obelix
Member
4 years 11 months ago

BTW I found a link for that piece of ‘news. YCan’t post it here because of rules on comments section, but easy to find if you google ‘Wereldomroep’ and browse through the news articles.

It’s just a piece of Saab bashing by an ignorant so-called journalist. Seems very unlikely he knows something others don’t know.

obelix
Member
4 years 11 months ago

Ok, till72, thanks. No need for it, though. I asked the journalist what his source is, and he referred to autoweek.nl.
The article on autoweek.nl just states that teh NDRC hasn’t made a decision yet about the deal between SWAN and PD and Youngman, which we all know to be correct. He just misinterpreted the article on autoweek.nl.

Ebolie-21
Member
4 years 11 months ago
The evaluation of Till72 is correct, but I think you have once to think about Chinese mentality. Chinese are inclined to be traders using all opportunities at the time given. I have followed management seminars in China and I therefore believe that I know what I am talking about. It is absolutely correct that Pa Dang had a sole interest to be a seller of Saab cars as a business opportunity to itself. The installment payment is proof of that. Then Youngman came in as a partner for production of Saab cars for the Chinese market and Pa Dang thought… Read more »
michaelb
Member
4 years 11 months ago

After that insider comment I have to excuse myself to the owners of PangDa for any negative word regarding their behavior.

Black Arrow
Member
4 years 11 months ago

Excelent evaluation, thanks!

ivo 71
Member
4 years 11 months ago

I agree with this assessment. It adds knowledge of the local business ‘culture’ and so makes our earlier analysis even more plausible. Well done, ebolie-21.

I keep having those nagging doubts about the true role of mr. Lofalk, the more so now we know about his own financial incentives to see Saab sold.

Ivo

ANA
Member
4 years 11 months ago

Ebolie-21 + others

I don’t want to come across as a bore but I am not sure that it is right to accuse people of ‘criminal acts’ without proof. As well stating that there were ‘criminal acts’ you also mention that Lofalk was double dealing in order to make a lot of money as well stating that the Swedish government was guilty of foul play…..
Personally I think it is fine to question people’s motives, morals, competency but when you start using legal terms and making judgements without facts than you are on unsafe ground…..

Khrisdk
Member
4 years 11 months ago

On that point I agree.

Ebolie-21
Member
4 years 11 months ago

That point you made ANA is wise and I probably would rephrase it. Thanks anyhow for pinpointing this aspect.

ivo 71
Member
4 years 11 months ago

Perhaps the wording wasn’t the best possible but that doesn’t change the presumable validity of the stated opinions.

ANA
Member
4 years 11 months ago

I agree that there were some good hypotheses.

ivo 71
Member
4 years 11 months ago

Good to be in agreement for once, ANA πŸ˜‰ .

Ivo

Henrik B.
Member
4 years 11 months ago
Is it just me, or this the “game” the Chinese are playing, just getting more and more expensive, for the Chinese!? By every month that goes by, Saab has to pay even more hundreds of millions of SEK, in salaries, to the employees. This only raises Saab’s debth, and thereby also the money any new owner will have to pay back, to the SweGov. Instead, I would have put my money into the company as fast as possible, to get cars produced instead. So all in all, I don’t think that the Chinese are acting very clever – although I’m… Read more »
fido
Member
4 years 11 months ago

i think they want pay, but NDRC say NO.

Kimberly
Member
4 years 11 months ago

They could be delaying specifically to drive up debt, so that SAAB is liquidated and the assets are auctioned off, in which case they get the prototypes, tooling, and IP all at a very tiny fraction of what it cost to research and design.

Ebolie-21
Member
4 years 11 months ago

You are absolutely right and this might be another motivation for what is going on! Thank you for bringing it up!

ANA
Member
4 years 11 months ago

I don’t agree, I think they are just trying to drive the price down and also get rid of VM.

ivo 71
Member
4 years 11 months ago

I don’t agree. In a bankruptcy situation they could never be sure that they will be able to acquire what they want. It’s a free-for-all auction and the highest bidder wins. That doesn’t necessarily have to be Youngman, many others are interested in Saab technology and research as it can save them billions on R&D.

Ivo

ANA
Member
4 years 11 months ago

ivo
Also Pang Da primarily want to distribute cars not build them and Youngman know about as much about car building as Saab does about making rickety busses for the Chinese market and so that would need to buy the knowhow as well…

Tripod
Member
4 years 11 months ago

But you are both right in not agreeing with the above comment, IMHO. πŸ˜€

Some, and even some journalists, well no surprise there, seems to be of the opinion that that is how it is done. You pick the pieces cheap. No way. They have no priority, being first in line. As Ivo said; in a bankruptcy it’s the highest bidder for every little piece they can sell; the better for the creditors, more to everyone. So I don’t understand where people got that idea about pushing for bankruptcy.

ivo 71
Member
4 years 11 months ago

Actually, Youngman build some pretty good buses under licence from MAN. And they also assemble passenger cars in serious quantities. Just go and see their website. So I’m pretty sure they are very, very, VERY interested in getting hold of advanced automotive tech. It would give them the opportunity to design and build modern cars of their own which may well become a hit on the Chinese home auto market which features some pretty obsolete and/or weird products. Lots more profit in that than in assembling cars for others.

Ivo

ANA
Member
4 years 11 months ago

Building under licence is VERY, VERY different from building your own cars!!!
Plus If they wanted to get hold of tech then they need Saab pre-bankrupcy as much of the tech will revert to GM if Saab goes under.

ivo 71
Member
4 years 11 months ago

Exactly. Which is why I don’t subscribe to the theory that they want Saab to go belly up, they need to be sure to get the stuff they want. If they don’t then they will probably never build a car they designed by themselves.

Ivo

ANA
Member
4 years 11 months ago

Well, we are agreed on something else then : )

ivo 71
Member
4 years 11 months ago

This must be our lucky day. You married or engaged?

πŸ˜‰

Ivo

mnztr
Member
4 years 11 months ago
It appears the Chinese have made the mistake that Victor really cares about saving SAAB. Victor is a businessman, SAAB is a perishable good. If there is no upside to Victor selling it, and if the Chinese try and use strong arm tactics, he will let SAAB implode for several reasons. 1) it would hugely embarass the Swedish govt. (which has been USELESS) and b) there is no downside to him. Either he gets a deal that rewards him and makes him and his partners whole, or no deal. Like I said, he WILL burn the house down, and I… Read more »
obelix
Member
4 years 11 months ago

Well, that seems highly unlikely to me.
If Saab goes bankrupt, Swan will have no value anymore, but lots of debts (for instance to VA).
He won’t be able to pay those back. VM is committed to SWAN, and SWAN is owner of Saab. So, in that way he is committed to Saab. But, if someone shows up and buys Saab from SWAN for more than the debts of SWAN, he might be tempted.

VM’s preferred scenario is that the Chinese become shareholders in SWAN and Saab prospers. That makes him prosper as well, of course.

ANA
Member
4 years 11 months ago

Agree, I think this is all part of the negotiation and am hopeful that they will agree on a price that works for both parties, possibly for 100%.

saabtec
Member
4 years 11 months ago

So Youngman is slated to be the only manufacturer by the NDRC. So why not stick with PangDa and their distribution network, and build all cars for the Chinese market in Sweden. North Street can maybe fill the missing $ void from Youngman. Just a thought.

obelix
Member
4 years 11 months ago

There’s too high import taxes in China. In order to be competitve in China, you have to build the cars there.

saabtec
Member
4 years 11 months ago

Thanks, point taken.

KaiC
Member
4 years 11 months ago

So we have to see each party showing their cards next month.

fido
Member
4 years 11 months ago

33 44 vs Black Joker+Red Joker

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