This is a long one, people, so sit back and take it all in. My position is still the same – we need to be concerned and active about a future Saab sale, just as we have been already. It’s just some of the reasons why that have changed a bit.
A few things have happened in recent days that have caused me to revise my thoughts on GM’s intentions with regard to Saab and I feel I owe it to everyone to explain why I feel such an urgent need to make sure that we, as enthusiasts, back Saab in whatever way we can.
There were a couple of triggers for this, and those triggers made me look back over the timeline of this year and join a few dots. As always at SU, I’m not in a position to know everything – that’s for the people involved – but I am in an educated enough position to draw the following conclusion with reasonable confidence:
A conservative summation of events this year has to lead me to believe that GM needs every possible push to negotiate a sale of Saab right now – they must be compelled to do so.
There were two triggers that have led to this conclusion.
The first was David Welch’s article in Business Week over the weekend. Having read this around a thousand times now, this nameless source of Welch’s was quite obviously genuine in his position at GM. However, I believe this source was dropping the first hint of a ‘good faith’ story, one intended to show that GM are giving ample consideration to a sale they’re hesitant about making. The message is “we’re trying our best. We’re giving them more time” and etc.
The second trigger was the dissonance between this and the fact that Spyker had submitted a revised bid to GM on December 20th and that they said they had addressed all points of concern that GM raised with their first submission. Combine this with Merbanco’s stated readiness to proceed, GM’s dismissal of Renco (who should be financially strong) and other buyers, and frankly, GM’s story to BusinessWeek just doesn’t add up if they are really serious about selling Saab.
I really do believe that GM wanted to sell Saab earlier in the year but having spent an entire weekend tossing this over, I get the feeling that GM’s will changed some time in the latter part of this year, most likely when Koenigsegg walked away.
That gave them an opportunity.
Take a look at the 2009 timeline and things becomes more apparent.
June 1 – GM files for Ch11 bankruptcy in the United States
June 9 – Ed Whitacre becomes Chairman of General Motors.
June 16 – Koenigsegg chosen as preferred bidder for Saab Automobile
July 10 – GM emerge from bankruptcy
August 18 – GM and Koenigsegg sign binding purchase agreement for sale of Saab
September 10 – Magna/Sberbank selected as preferred bidder for Opel after a lot of pressure from German government
November 3 – GM back out of Opel sale
November 24 – Koenigsegg back out of purchase agreement to buy Saab
December 18 – after receiving initial bid from Spyker and despite continued interest from Merbanco, GM announces that Saab will be wound down.
Under severe pressure from the German government, with bankruptcy fresh in the minds and a CEO at odds with his aggressive Chairman, GM decided to sell Opel to Magna/Sberbank. Once GM got wind of the fact that loans offered to Magna should be available to GM themselves, they reversed course and decided to keep Opel, saying the company was too important to lose (which everyone knew anyway).
This emphasis on Opel meant that GM had a stone in their shoe with regard to the sale of Saab. Koenigsegg backing away meant they had an opportunity to preserve the technology developed for Opel. If Saab are wound down, they are already legally broken down into 5 pieces and GM can keep Powertrain Europe and some other areas and sell or wind down the parts of the operation they don’t want.
My fear is that the drawn out process we’re witnessing now is a chance for them to do this and safe face with the community and their government owners. They’ll be able to say “we tried” whilst stalling buyers at every given opportunity.
Why would they want to do this?
Firstly, in the context of the GM bancruptcy, GM forced the Saab dealer network in the United States to sign a Deferred Termination Agreement over the summer, which waived the dealers’ rights to State franchise legal rights and legal remedies to dealership closure by the manufacturer. The dealers signed these new agreements – signed away valuable legal rights – on the basis of expressions of GM’s good faith efforts to sell Saab AB. If the dealer did not sign, they would be terminated immediately with no compensation and they would not have the opportunity to be a Saab dealer after the sale of Saab was complete.
I guess the cynical amongst us could call these protracted negotiations GM’s idea of a “Good faith” period for the purpose of these new agreements.
Secondly, they’re an entity that’s just gone through a bankruptcy and are government owned. Leading up to that bankruptcy, they said they would sell Saab or wind it down and they gave themselves almost a full year to do so. Blaming what they label as inadequate buyers looks a lot better to the public than just shutting things down in one fell swoop. GM get to look diligent and considerate in public whilst shifting the goalposts at the negotiation table.
Consider the recent statement in BusinessWeek that buyers are “unfunded”.
An inability to get EIB loan approval in a quick timeframe was one of the concerns of the initial Spyker bid and as we’ve heard, and read in print, the granting of an EIB loan was removed by Spyker (and I believe has been removed by Merbanco) as a condition of their bid.
This is the only funding concern that has been mentioned. It was removed in the revised bid and now all of a sudden GM consider the bid to be under-funded? It’s my belief that GM have shifted the goalposts and now require bidders to have capital that covers what would have been provided by the EIB loan.
So there you have it.
Regardless of what the Swedish government decide to do (and I hope they do everything they possibly can), it’s within the borders of the US that this decision will be made and having looked at this over and over, and having discussed it with people in the know, people I trust, I can’t come to any other position than to say that this situation seems more urgent now than ever.
GM need to be held to their promise of negotiating in “Good Faith ” to sell Saab as they promised their dealers. They need their shareholders to hold them to account and act responsibly for the good of all and not just the elimination of a small future competitor.
I know this is a lot to take in and haven’t taken the writing of this article lightly. I recognise that this is a change of position, even though GM’s ability to sell Saab has always been a point of concern.
GM has so far not managed to close one single deal out of the 4 which were on the table this year (Opel, Saab, Saturn, Hummer) whilst Ford sold every entity they put up for sale. One would expect a new GM CEO to be motivated to show that “New GM” stands for some real change and an ability to do the sort of thing that old GM could not.
GM have proven time and again that they are willing to change position on a deal. The Opel outcome is the best case in point. We have to try and make sure they stick to stated positions on Saab.
GM will make their decisions in the next week or so.
The job of Saab’s potential buyers is to compel them with a viable offer, and our job as a Saab community is to make enough noise so that people watch how they respond.
The time is now.