Where to Turn Next

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Remember this Press Statement from a month ago?

SPYKER ISSUES SUBCRIPTION NOTICE UNDER GEM FACLITY

Zeewolde, The Netherlands, 16 May 2011 – Spyker Cars N.V. (Spyker) announces today that it issued a subscription notice for 1 million shares under the current EUR 150 million equity facility between Spyker and GEM Global Yield Fund Limited. The exact number of shares to be issued and the price thereof will depend on a 15 day pricing period, which commences today.

You read that right, Saab has a credit card essentially for up to EUR 150 million when times get really tough. They initiated the agreement as backup financing when they purchased the company from GM, and after this latest share issue if my math is correct they still have most of it left.  It’s expensive debt, it involves issuing shares with a 15 day pricing period, but it’s cash nonetheless to at least stop the bleeding. I wish Saab had tapped into this or something similar sooner to prevent today’s situation, but it seems that only a few legal documents are the culprit holding up the property sale deal, and they misjudged the timing on it’s finalization. From all indications, it appears to be a big mistake at legal on this one.

According to TTela, Victor Muller is in the US right now looking for immediate liquidity injections. GEM is based out of New York. Something tells me it might not even be the GEM funds that Victor ends up finding the best deal with this time around, but for all of you out there who suggest Saab is out of lifelines, I’d ask you to remember this major one.

104 thoughts on “Where to Turn Next”

  1. Clutch.

    I agree with you Jeff, shame this wasn’t used to prevent the latest blow, but hindsight is 20/20…

    Unfortunately, the paycheck drought is absolutely all over the media sites right now… Insideline, Jalopnik, Bloomberg, you name it.

  5. GEM = Not an option (at the moment)

    At the moment Saab needs at least 30 (or more) million euro.
    At the moment the share price = <1 euro
    GEM gets a discount on that price so they pay <0,90

    For 30 million euro GEM would get 33 million shares (or more) and that would make them (by far) the largest shareholder.

    At the moment there a 18 million outstanding shares after an issue to GEM that would be 51 million shares.

    And it would give GEM a 64% share in SWAN that is not an option.

    The deal with GEM only works when the share price is high. Also GEM wants to do dump their shares (that's why they get a discount) and at the moment nobody wants to buy SWAN shares.

    • Robbie, please read the original press release again. It states that the exact prices will be based on a 15 day pricing period which start May 16th. So the stake GEM would get is far less than 50%.

      • And do you think GEM will be happy to buy shares at this moment and lend SWAN some money? Guess not.

        Also the price of the price they pay per share will be determined in the future (not the past) and at the moment it doesn’t look good.

        Even if they pay 3 euro per share (which is a lot) they will get 10 million shares and will hold an interes in SWAN of 35%. Guess they don’t want that.

        • Who knows about their intentions, I don’t but it seems you do 😉
          Anyway, they’ve got the possibility to issue shares at a price based on a 15 day average (may 16th – may 31st) but having an 30% -or more- stake would mean they will have to make a bid for the entire company and I don’t think they will do that. Let’s wait and see, that’s all we can do…

          • I am not wrong! i know my facts 😉

            As back-up financing, Spyker entered into a EUR 150 million Equity Credit Line Facility with GEM Global Yield Fund Limited (“GEM”) for a term of 3 years. According to this facility, Spyker may issue shares to GEM at 90 per cent of the volume weighted average price of the shares over a period of 15 trading days following a draw down notice sent to GEM by Spyker.

            Source: Press release Spyker Cars

            Your source says only “15 day pricing period”, it does not say: a period of 15 consecutive days.

            And it also logical because trading days = 3 weeks
            Otherwise it would be 14 days = weeks.

    • Also, anyone wanting to own more than 10% of SWAT will have to be approved by the EIB.

      Remember the Gemini cash injection? It had to be structured as a loan with an option to be converted to shares after 6 months, so that Gemini had time to post a request for approval and time enough for EIB to approve it.

      The low overall value of the total stock makes it very hard to draw money from the GEM fund. The 4 million euro they got on may 16 was probably the maximum at the time without hitting the 10% limit.

    • I didn’t suspect they needed €30 million, I was looking for a smaller sum to at least get through the salaries. Before the tumble this morning (when I wrote the post) it would have required less than half the shares for even that amount. For €4-6 million Euro to hold it over until the Hemfosa deal comes through was more what I was suggesting. This isn’t their medium term financing plan, it’s to keep them from having to file for bankruptcy.

  6. They first used it to purchase the company from GM

    That’s not true. They intended to do this, but they didn’t! They got this money from Heerema.

    Spyker paid for Saab in the following way:
    USD 25 million is borrowed from Tenaci
    USD 25 million convertible loan agreement with Heerema Holding Company Inc.
    USD 24 million a loan from Saab Great Britain Limited

    No money from GEM was used to buy Saab.

    • @Jeff, please use this information in your article.

      It is wrong to think that Spyker issued shares to GEM for the purchase of Saab!

      They first used it to purchase the company from GM

      = Not true!

  7. Here’s a nice story for a change:

    Leif Pagrotsky, a very public and quite popular Swedish politician, a former minister (among other posts, he once held Maud Olofsson’s job as Minister of Industry) and the economic brains of the opposition (though he declined the job as shadow finance minister), has just bought himself a new 9-3. His reasoning:

    “That was the car I liked, a diesel with good [emission] values and a bit smaller than the Volvo V70 I’ve had since 1999. It was good value for money, seems good and fuel-efficient. I thought that if everybody who is worried about Saab stops buying, then that would be even worse for Saab.”

  8. re; USD 24 million a loan from Saab Great Britain Limited

    Maybe, just maybe us Brits could do it all & float the Co, so shares could be offered to Saaies worldwide.

    Saab GB, has always been the powerhouse of Saab sales, so you guys over there (@ Saab GB) put some thinking caps on.

    My Money is still on the table………………

  9. According to his biography, I think Mr. Muller thinks that he is supermen. He was a lawyer, then CEO in Spyker, then designer (!) in Spyker…is he a polihistor?

  10. Maybe Victor should ask all the Saab dealers and owners to contibute whatever they can afford to some sort of Save Saab Fund! I guess most people who love Saab would contribute something. I wouldn’t have a clue as to how much something like that could bring in, but it could make the disgusting and shameful Swedish Govt realise what Saab means to a lot of people, not least the people who work for Saab!

    • A lot of dealers already contribute with puring their own capital in their loss making dealerships. After suppliers and unions, the next revolting factor are these dealers. Expecting them to put money in a ship that is constructed wrongly (that enhances corrupted influence/deal-breaking) is asking the impossible.

  11. Swedish Radio has a long (six minutes) and very interesting interview with car industry analyst Matts Carlsson about Saab’s situation. He gives a far more balanced view than other commenters I’ve read or heard today. Carlsson believes that Saab’s future in the longer term looks quite good, provided they can get over this short-term hurdle.

    The interview is in Swedish of course, and as far as I know, google haven’t come up with an automatic audio translator yet, so I guess this tip is only useful for some of you…

    • I have to agree but they first have to get their short term financing issues solved. After that the Pang Da/Youngman deal needs to be approved and they will need to restore trust. That will take a lot of time, money and effort…

  12. From Swade him self:

    My response, however – no chance. No chance at all.

    There’s no covering over the darkness of the hour, but I keep telling people what a colleague told me last year: when you’ve got new, great product, there’s always a reason to keep on going. Right now, we’re in a very difficult position. But we’ve got heaps of great product on the verge of release and even better technology being worked on out in the back rooms.

    For me, there’s absolutely no chance of giving up on this company. I can’t wait to get back to Sweden next week, rally with my colleagues and take up whatever fight we have to win.

    • I just LOVE your comment, man =)

      It´s comments like that we need in hard times!

      Actually – I´m praying to God that SAAB and the employees will be saved ffrom this unfair treatment – and that SAAB will show the world that little David still can win a fight against Goliath!

      I´m qiuet bored to hear these no-sayers and black birds screaming that SAAB is dead. In up-coming commercials SAAB just got to have a CAT with 9 lives as a symbol! I believe that the end is NOT near!

  17. Was it not in the press that Vladimir gave Victor the money to buy Saab? I think it is also that Gemini is owned by his fathers banks. It seems like all paths come back to Vladimir in this. Banking is complex but I doubt he stands to make a loss and that is what the smart and wealthy do isn’t it?

  18. When i reread this press release:
    http://newsroom.saab.com/news/news/saabautomobiletemporarilysuspendsproductionpendingmorestableinflowofcomponents.5.741c75ab12da7f448807ffe2505.html
    i feel angry on how the Saab management deals with the brand of Saab, suppliers, customers, fans and their employers.
    The “mission hope” seems to be at that time in place. Maybe they hoped to fix a deal to get a very short time money injection to ramp up production. Playing a risky game. Does they burn more money than before or is this a subjective feeling (not objective).
    My personnel feeling: They need more money to get a restart and a clear balance (remember the deal on in front paid cars for Pang Da – parts must be paid, cars must be manufactured and wages must be paid).
    As they get rid of confidence with suppliers it will be a hell job to get a payment on delivery vs payment in front of delivery.
    Not easy for me to accept that the brand is in such a sad position. There’re a lot emotions with Saab on my side. They made it “better” than GM, which wasn’t an easy job 🙁
    I production couldn’t start in short time there’s no chance to save Saab. Hopefully sun rises up.

  20. A massive injection of liquidity is required short-term to pay salaries and supplier bills, and even more massive further capital is required to stabilize the company and allow to execute a reasonable long-term business plan. Finally, a new management has to come, as the current ownership is discredited.

    With what happened this week, the two Chinese companies will probably not exercise their options at the prize agreed in the MoU, and that means either less money to come, or the existing shares will become completely worthless.

    However I do not agree, that it is in the interest of the two Chinese partners to wait for bankruptcy, then buy up some pieces like the 9-3 or 9-5 technology. As opposed to Rover Saab has (up to now) substantial innovation potential and good current and future products. It lacks capital big time and a financially reasonable management. Saab is just of longer term value to them, if the existing structure with R&D, engineering capacity and production in THN, worldwide dealerships and contracts with GM will be maintained. I cannot judge about their financial muscles, but I agree that it is a big opportunity for them. Btw the same is valid for other potential new owners, as the newly established partnerships with the Chinese companies are certainly very welcome.

    Unfortunately I think hurdles to get short-term funding somewhere becomes even more difficult, without a substantial contribution by existing shareholders. If to look for such money, the capacity and willingness to contribute as well will be required.

  21. Audi went through the same situation in the ’80s and early 90s. Look where they are now! Saab can do it. Even if it’s just to prove the naysayers wrong, let’s win this thing, Saab!

  22. I just saw the local SVT news for western sweden, they said that VM is in the US and are talking to GM. Not sure if that is true or if they did mix up GM with GEM?

  23. This is madness, nothing but total madness.

    A loved brand.
    A high quality product.
    A world wide well known and respected brand.

    And a filthy wealthy nice guy named Antonov who knows a good car when he sees one.

    What´s the problem?!

  24. I keep saying this……I have £100 now, today (sure there is 1000’s Saabers like me)..

    Just tell me where to pay it into…………………………& more to follow if it works!!

  25. as someone posted before, try to find a way to handle public donations …. 30 mil is quite big money amount, but a million people with 10 euros will make it 20 mill …. I am up for that ….

  26. Can we paint a picture of the situation?

    Rumors said that outstanding debt could be 5x-6x Mil Euro.
    Than we have salaries of around 10 Mil (SEK?) per month

    Incomming:
    5-6 Mil Euro from Saab Parts division every month up to now. They must react asap
    Prototyping/ dev for GM/ Opel ?

    Is it possible to get a fly by calculation?

  28. I just came to online and didn´t look previous comments carefully but I would have an idea. How many Saab-dealers there is around the world excluding pang-da? If every dealer would order ONE extra Saab NOW and would pay it immediately in advance as Pang-da? I think dealers have that much “loose” money to support their “mother company”. What is the risk there? They could get cars and they could be sold as usual. Or those prepaid cars would be something specific same way as independence edition Saabs, for example these being “employee edition” each car would have kind of different signature or something small special. Or what I have also thought, if my dealer would have convertible Saab, which could be borrowed from dealer. I think I will never buy that kind of car but it would be nice to drive with that kind of car and even pay from rent with reasonable sum. That way we Saab-fans could support Saab, driving Saabs and kind of co-owning some special models. Point is, lets help Saab buying them but now just paying them in advance. It´s not my idea I stole it from Pang-da and VM…

    • The problem with the dealer ordering one extra car is that US dealers have far too many cars already sitting on the lot waiting to be sold. Many dealers are losing money and can’t afford to order more cars. Plus, with the production shutdown, the dealer would not be guaranteeed that the car would be built.

  31. I truly hope Sweden as a country remembers that after this is all said and done, that they stood by and watched an ICON of their own culture break off and crumble into the sea. Later on I can tell my family about a car company that produced the most intelligent cars on earth once upon a time……….makes me sick to the very core of my being and ashamed to be a Swedish American.

    • Feel free to bash Swedish politicians and Swedish media all you want, but kindly refrain from bashing Sweden as a country. Generally speaking, it’s quite nice here!

      • I agree, Sweden is a lovely country, only been once in 1993, great place nice people and fantastic Saab.

        However the Swedish government would seem to be misguided, you cannot survive on service industry.

        You must manufacture to create wealth and pay high taxes!

        If SAAB does not build the car, the truck driver is not needed to transport it to the garage, for the saleaman to sell, for the financier to finance, for the insurer to insure, for the mechanic to fix, for the girl in the fuel station to take your payment – the list goes on!!

        This is why all the truely rich people and Nations produce/manufacture. I doubt if windmills fall into this catagory as most are heavily subsidised by government, when the UK givernment were tight with money for windfarms Vestas moved production out of the UK in short order, no subsidy, no factory for those green products.

        Bazzer

  33. One thing for sure, VM isnt giving up without a fight. I do, however, think JAJ’s resignation timing was rather ominous.

  35. Do you think Jan Ake saw some things were not quite by the book and I also note that the new CFO took hasty leave.

    A Chief Financial Officer must have had a reason, what ever happened to him?

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