Djup Strupe and an update on the Saab sale process

This is the biggest entry of the day, so I thought I’d re-post it back to the top of the site. Subsequent entries continue below

I’ve been collecting bits of information for the last few days about various players in this Saab sale process. I think we’re at a point now where I need to put some of them on paper.
These are the collected tips from several Djup Strupes (that’s swedish for Deep Throat) who are well placed to know.
Bidder re-emerging
I don’t have a name for the consortium that’s trying to get back in the bidding process, but I have managed to get a few details.
The bidder has been reported to me as a consortium based in the western United States. They’re reported to be very serious players with a long term outlook and a genuine interest in developing Saab. The group was reportedly extremely well received by the team at Saab but their initial bid was seen as too low by Deutsche Bank, who are working on behalf of GM to find a buyer for Saab (more on that in a moment).
There is not much more that I can say about this group except that they are trying to get back in the game. Whether they have been successful in that, and whether they are the only ones trying to get back, I also don’t know.
With a description like that, though, I’d like to see them get back amongst the fray.
Koenigsegg concerns
Something that popped up in comments here got me crunching some numbers today. Combine the results with some Djup Strupe whispers and it’s got me to the point of being concerned about Koenigsegg’s bid for Saab.
Koenigsegg reportedly sold around 20 vehicles last year. At a price between 750,000 and 1mil Euros per car, that means a ballpark figure of up to 20million Euros in revenue, at most, from automotive sales.
I’m not sure what other revenue streams K-Segg might have; maybe they do engineering work for others and I guess they might have some servicing revenue with an intense customer service focus, but at most you’re looking at revenues of less than 30million Euros in total.
My concerns are not whether Koenigsegg can scale up and take supervision of a mass producer. They only build a handful of cars at a time, but their construction method is one that is designed to be upscaled. And Saab management would still be Saab management.
My concerns, even with Bard Eker on board, are that their combined businesses just don’t make enough money for them to be adequately financing this bid. They must be the pretty face fronting for (a lot of) other people’s money.
The most worrying part is the Djup Strupe whispers that came through this week – that they might be having some trouble getting that money together.

The word is that some initial partners in the deal have now pulled out and that K-Segg are scrambling as a result. I first heard this almost a full week ago now, and have heard it several times since. The further they have to go to finance this, the more difficult could be the conditions under which they do so.
We ought to be careful what we wish for.
Renco concerns
UPDATE: The BBC have a brand new report on the Renco situation in Peru. Recommended reading.
I reported this a few days ago, but it bears repeating in the context of this entry as it’s about a potential bidder for Saab.
Renco’s Doe Run Peru operation is closed at the moment as their bankers have frozen accounts (due to low commodity prices) and an extended line of credit offered by suppliers has been cut off.
This is due to Renco failing to meet key commitments in cleaning up the Doe Run site at La Oroya, in Peru, within the time specified by the Peruvian government.
They were to have installed three cleaning filters but have only installed two. They were to commit another $150+ million to cleanup but have failed to do so and they were required to hand over shares in the company to the Government as an assurance that they would complete the cleanup but have failed to do so.
If this is a matter of money, then it is a matter of obvious financial concern given that they want to take over Saab.
If it’s a matter of convenience, then it’s ethically reprehensible.
Deutsche Bank concerns
This is just some opinion based on the above.
It’s becoming obvious that Deutsche Bank are briefed with a task of extracting the absolute maximum amount of money they can for Saab. Whilst some takeovers like this will end up with the buyer that is the best “fit” being the winning bidder (thereby ensuring a longer-term relationship with a stable operation), Deutsche Bank are persuing bidders that have possibly promised much in financial terms, but may not have the resources to pull the deal off without stretching themselves.
The Opel sale and the shenanigans GM pulled prior to it’s announcement is evidence that they will pull just about anything to gain an advantage. In this instance, it looks like they’ve instructed Deutsche Bank to look totally in terms of price and place minimal value on Saab’s long term outlook.
And that’s all rather silly when you consider that Saab’s price is going to be a drop in the ocean compared to GM’s debts in bankruptcy, and yet a strong Saab could do wonders in terms of an expertise-based relationship, developing technologies that GM could use in the future (for a fee, of course).

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