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Friday Snippets: No Deal Yet

Updated to reflect Victor’s statement to WSJ that the 54% share deal for the Chinese is “off the table.”

As we continue to report, there is a constant shuffling of deals going on behind the scenes. Unfortunately, there’s still no resolution. As such, Swan must prepare contingencies for the worst.

From Bloomberg BusinessWeek:

Swedish Automobile NV, the Dutch owner of Saab Automobile, may liquidate even if it succeeds in selling the former General Motors Co. brand, as the proceeds may not be enough to pay off creditors.

Swedish Automobile, which has tentative agreements to dispose of Saab as well as its Spyker sports-car business, will consider “all of its options,” including a voluntary liquidation should the deals go through, the Zeewolde, Netherlands-based company said today in a statement.

The transactions would raise 132 million euros ($181 million) and would be insufficient to cover the company’s 136.5 million euros in debt, said Swedish Automobile, also known as Swan. A lack of approvals and final agreements on the deals raises questions about “the future of Swan and any settlement with stakeholders,” the company said.

From SvD:

Swan and the prospective buyers Pang Da and Youngman continues to discuss the options of a business based on the letter of intent stating that Chinese companies will buy 100 percent of Saab. The letter of intent expires on November 15, but without an approval from GM, it is uncertain if it becomes a binding share purchase agreement before then, write the Swedish Automobile (Swan) in a statement.

The company also writes explicitly that if the sale of Saab does not succeed or they can not secure new financing, management will probably not be able to ensure Saab’s survival. Then bankruptcy would be a threat.

The meeting took place at the Swan’s headquarters in the Netherlands Zeewolde.

The first notice of the extraordinary general meeting ended on September 30. When the plan was that the Chinese companies Youngman and Pang Da would buy into the Swan and own 29.9 percent and 24 percent respectively. CEO Victor Muller’s company Tenaci would own 27 percent.

The setup crashed and the parties presented the October 28 a letter of intent to Chinese companies instead would buy all shares in Saab Automobile and Saab Great Britain.

Then came the shocking news from General Motors on Monday that changed everything. The car giant yesterday said it will not let Saab sell the technology licenses required to build and sell the current Saab models.

Since then there have been ongoing discussions between Saab’s management and Youngman and Pang Da to find a solution that GM can accept. The deal also requires approval from several other parties, as Chinese and Swedish authorities and the European Investment Bank, as Saab has loans with government guarantees.

Regarding the Spyker sale, as we have been hinting for a while, North Street Capital is still involved. Though the extent of their involvement has been in flux, an unreported fact. Bloomberg also confirmed this, and as SvD reports:

Since Swan also negotiating to sell the Spyker sports car business to U.S. private equity firm North Street Capital is a risk that there is no activity left on the Saab is also sold.

“It may end up as an empty company with a lot of debt,” says Patrick Beijer Mountains.

The purpose of the meeting is mainly to provide information and hear the opinions of shareholders.

Swan’s shareholders since the beginning have seen the value of the shares to fall almost 90 percent. On Friday, shares were traded on the stock exchange in Amsterdam for 0.41 euros.

To move forward, Swan is trying to gain more time and extend the negotiation schedule, which makes sense because all parties remain very interest in reaching an agreement. From DI.se:

On Tuesday, November 15 is the parties’ intent out and then Youngman and Pang Da break off relations. It is uncertain whether a binding share purchase agreement is reached before that, without an approval from GM, Swan writes.

Therefore, is now negotiating with Youngman and Pang Da that may extend the exclusivity agreement, says stämmodeltagaren for di.se.

According to di.se, the format of the 100% ownership transfer must be changed to meet approval from GM, as we’ve reported for some time.

The format of the transaction is subject to change, Victor Muller’s message at the meeting, telling the participant to di.se.

Instead of Youngman and Pang Da becoming the owner of 100 percent, which was thought as the letter of intent between the parties from the end of October, is now discussed arrangement where Chinese companies become shareholders, and Swan as well. This as a way to deal with GM.

Other blogs are speculating that they will return to the old share structure of 29.9% Youngman, 24% Pang Da, but there are many signs that talks are beyond that point. GM has certain conditions now that must be satisfied, and the deal will almost certainly change.

Saab Automobile’s former owner GM, which owns the technology that several of Saab’s car models are based on, Monday objected to the deal and said it won’t continue to license its technology to the Swedish brand following the proposed change of ownership, a move that could scupper the planned sale.

Victor Muller said Swedish Automobile and its Chinese investors are now trying to find a new ownership structure that GM can accept, but that the old proposal of Pang Da and Youngman taking a 54% share is “off the table.”

In July, Swedish Automobile agreed with Youngman and Pang Da to sell a 54% stake in Swedish Automobile for EUR245 million, a deal which fell apart when Pang Da and Youngman instead offered to buy 100% of the shares in Saab Automobile and its U.K. dealership from the Dutch owner.

Muller said the ownership structure of the July deal was “very carefully crafted” with three large minority shareholders, non of which had control of the company. By offering to buy 100% of Saab Automobile instead the Chinese investors made it very clear that they wish to take control of the Swedish brand, he said, and that is, according to Muller, the reason they now have to find a new ownership structure if the sale of Saab Automobile is to be approved by GM.

“We have negotiated ourselves backwards,” he said.

While we know the numbers being tossed around, since nothing is final there’s no reason to complicate negotiations by revealing anything at SU. This is the most sensitive time in the company’s history, and they deserve space free from endless speculation to accomplish a deal. Reporting news is one thing, getting ahead of ourselves is another.

Please continue to be patient, the teams are doing everything they can to get a satisfactory outcome for all parties, as everyone is well aware that liquidation should be a last resort. No one prefers that outcome, even most creators and GM. There is far more money for everyone given an achievable sale.

jond
Member
4 years 10 months ago

Good luck to all for a successful outcome!

ANA
Member
4 years 10 months ago

To read reports like these is just heartbreaking, and it makes me wonder how on earth Saab was managed into this situation. But I haven’t given up hope, yet..

Troels, Denmark
Member
4 years 10 months ago

Isn’t now the time for all Saab-fans in the world to raise pressure on GM once again?? Or will it be better to wait a few days to see if a solution will be found ??

GerritN
Member
4 years 10 months ago

GM has every right to protect its IP and its market share in China.
SWAN, Pang Da and Youngman have to find a construction that is agreeable to GM.
In a way a deal where SWAN would remain a major (or even minor) share holder in Saab would, imho, also be better for SWAN. The current 100% sale would leave SWAN with a very negative balance and impossible to pay off all its creditors. Staying a share holder in Saab would at least give SWAN a chance to recoup its losses, assuming that Saab would become profitable again.

theSandySaab
Member
4 years 10 months ago

Gerrit, I agree with you that GM has (the right) to protect it’s IP and marketshare in China, BUT as GM seems to sell more than 200.000 cars per month, only in China, Saab sales in China, and the world for that matter, would be a minor issue, especially that the respective models are not really competing…
The problem is probably not the Saab volume but the ultimate (unknown) intentions by PD/YM in regard to the licensed IP…

GerritN
Member
4 years 10 months ago
Sorry, but I don’t agree. Pang-Da and Youngman have every intention to start Saab production in China. That could be a much larger production than the Swedish one and would definitely start eating into GM market share in China. There is also a lot of unrest in China at the moment with respect to an expected saturation of the car market. It is more than likely that cars build in China by a Chinese company would get a preference treatment from the Chinese government if they instate car production quotas. A huge company like GM has to take all of… Read more »
RS
Member
4 years 10 months ago

It is interesting though that EVERYONE would gain from ‘The Deal’ if it’s set up right.
Saab Automobile, Saab employees, suppliers, dealers, two Governments, THN, GM, PDYM, SWAN, EIB, the Saab fans/owners etc. etc… Basically everyone involved.

Come on folks! Time to see the common good.

JB
Member
4 years 10 months ago

The fat lady just entered the room. I’m sick.

hans h
Member
4 years 10 months ago

Bianca Castafiore? I hope not! 😉

quickbird
Member
4 years 10 months ago

Which fat lady, can anyone offer a picture? Thanks.

No 9
Member
4 years 10 months ago

I never looked at it this way but it dawned on me yesterday. GM had a very good reason to sell to Spyker, or Koenisberg for that matter. Both their business plans were very optimist, and GM knew that. If by a miracle one of these buyers succeeded, GM gained a client and got rid of the responsibility for the pending warranties. In the advent of a failure, they still get rid of the warranties…

GerritN
Member
4 years 10 months ago

I don’t think that’s true. As I remember it the warranties revert back to GM if Saab goes under.

mnztr
Member
4 years 10 months ago

What purpose does SWAN have as a going concern once SAAB is sold? As far as I know it really has no other business other then to be a holding company for SAAB shares…

scand
Member
4 years 10 months ago

it can carry on (not) making Spykers till that deal falls apart too.

Khrisdk
Member
4 years 10 months ago

Or until that deal comes through. 😉

All in the eye of the beholder

74StingSaab
Member
4 years 10 months ago

stuck at sea, no wind in the sails…..

amigabuzz
Member
4 years 10 months ago
TATA might be better fit for SAAB, not sure if SWAN has reached out to them or if TATA would be interested since they have taken on Juaguar and Land Rover. To TATA’s credit they do own luxury upscale cars and seem to have kept the R&D going. Sales in South Florida are decent with a least several hundred units per month vs SAAB’s several hundred for the year…so whats different is Advertising $$$$$ TATA is spending money to compete against Infinti…guys Infiniti’s new M35 is a SAAB 9-5 near clone in style. Hey I own a 2011 9-5 and… Read more »
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