Decision Week – Extended
December 8, 2011 in Editorial
It’s more or less quiet on the news front today. Time to take a breath and reflect a bit. Yesterday we featured the article from Automotive News China that stated that Saab is trying to get a loan of 600 million Euros from Youngman and that unnamed Chinese bank. It caused a lot of discussion in comments and views were quite contrary.
No matter how you look at it, the core in this idea of taking a convertible loan or/and issuing preferred convertible shares is trying to find a way to avoid the need for GM’s approval. I still think the plan itself could work out even though you stumble into the next questions about how GM would react and what NDRC would think of this. GM is pretty stubborn when it comes to protect their interests. They are neutral in an evil way, they don’t actively kill Saab but they don’t offer help either. In the end, you can’t even blame them because in today’s business world everybody is looking for his own favor. NDRC may let this go through if you can sell it to them as a long term investment, which it surely is. Even more, this would secure the investment already made.
So, what’s left now for Victor and Youngman is to find a way to get things done without the need for approval. Using preferred shares is not the only tool here, ownership change below 19,9 % should also be an option. Maybe even a combination of both. I’d even imagine that GM would be fine with such a scenario as their major demands would be met. Even if not, they had to fulfill their contracts with Saab as they are. But still, it would not be wise to burn all bridges to GM as there may be three or so years until the companies are fully divorced.
When I look at the interview Guy Lofalk did with di.se, he states that GM was not open for negotiations and did not say what they requested to let a deal go through. Well, GM said this before, total ownership change below 20 %. The reason that every proposal had a higher change is pretty clear – those who inject huge amounts of money want to get a certain share in the company. So they had to give it a try and hope for GM to ease its mind. Having a pure strategic investor on board taking over a certain share and keeping Youngman under the 20 % barrier could have worked. Noone wants to go into such a process on his minimum demands.
Lofalk blames GM for blocking all proposals and Youngman for not injecting the cash they promised. This statement lacks perspective. I already talked about GM, so let’s get to Youngman. They promised to put in money based on a MOU that is void by now and no additional has been signed up to now. Even if they wanted, I highly doubt that they can just put in the money without any agreement. On the other hand they are still at the table working hard on a solution. They seem to be very dedicated to this, unlike Pang Da who stated this week that they are still in but the fact that they are not in the latest proposals speaks for itself I think.
What I really miss in the interview is that he reflects on his role in this process. Given that he had to know about the ownership change clause in the contracts I still feel that supporting the 100 % takeover attempts by Geely and Youngman/Pang Da wa pretty foolish. He surely has no other choice than to end reconstruction in the current situation. This is not his fault. He has messed up things before. Not that he is responsible for the situation of Saab as it was when he took over. But as I see it he was not helpful either.
Meanwhile, as work goes on in Stockholm and elsewhere, all we can do is keep calm and carry on. It is very tough for Saab, but it is not over yet. I know that all involved will explore every possible option to pull this through. There is so much at stake, for Saab and also on a personal level for the involved parties, that everybody’s motivation can’t be any higher.