Press release: Swedish Automobile Issues Subscription Notice Under GEM Facility

Trollhättan, Sweden: Swedish Automobile N.V. (Swan) announces that it issued a subscription notice for 3 million shares under the current EUR 150 million equity facility between Swan and GEM Global Yield Fund Limited. The exact number of shares to be issued and the price thereof will depend on the pricing period which commences today.

In light of recent developments, North Street Capital, LP will not subscribe for 2.3 million shares in Swan and revoked its commitment to provide a loan of USD 60 million to Saab Automobile.

16 thoughts on “Press release: Swedish Automobile Issues Subscription Notice Under GEM Facility”

  1. Can someone explain this GEM deal and the Asians deal?
    Money gets in SWAN accounts and not in Saabs?
    What is behind the 3 mil shares of SWAN?
    SWAN is if deal is finished no longer shareholder of Saab Automobile and Saab GB?
    What about GM which is still a shareholder of Saab automobile?

  2. How many SWAN shares does GEM have in total at the moment? Do they have a say in the Saab deal? And why does SWAN still have to use these means to get cash if the reconstruction is to be financed by the Chinese parties?

    • It seems GEM sells these shares on the open market as I can find no reference of them being a major shareowner (>5%).
      On the ~3 mln Euro… I guess they need that money to pay the remainder of salaries (Oktober 21-31).

  3. So, err, the Chinese are so totally committed to the deal that they won’t even chip-in some more money (as part of the existing, “binding”, bridge-funding agreement) to cover the wages shortfall?

    I really don’t like being on the negative side of the discussion, but what the hell is going on? The Chinese can’t find a few million euro to keep the company afloat whilst they finalise their desire to pump hundreds of millions / billions of euro into the company?

    I know it might be a little defeatist, but this seems a little odd.

    • This has of course been up in the deal that is made. It is the net result that matters for all parties, and maybe this was the most practical way to do it.

    • Let me try and look at it from a not-so-negative side: Y/PD have pushed SAAB’s management against the wall and said: here’s 100 million plus we’ll honour all the debt that SAAB has towards SWAN, but until we take over it’s your responsibility to cover whatever needs to be covered. The only option left is equity, and who’s the entity that has entered into a binding agreement to invest in SWAN equity? GEM.

      Of course this is just (quite silly) speculation from my side… I understand your concerns and share them. Until the final deal is signed and money is in the bank (and by ‘bank’ I mean in SAAB Automobile bank accounts, not the payments to VM/SWAN/whatever) it’s all about waiting and watching.

      • I wasn’t really trying to be ‘negative’, but GL claimed that reconstruction could not continue because of a lack of cash; according to GL, even the NSC money was insufficient.

        What we haven’t seen yet is a roadmap to completion of the deal. Can the Chinese state paperwork be done by the 15th, for instance?

        • I agree, all is still in the “foggy futures” section. The big issues appear to be:
          1) Secure all the funding needed to continue with reconstruction;
          2) ALL of the paperwork done and signed so the takeover can continue;
          and 3) Getting the money into SAAB Automobile AB so the issue of production can be taken care of at last.

          I’d say 1) and 2) would be parallel in a timeline representation of the process.

      • I keep wondering what is going to happen with all those other, operational and staying-alive debts of Saab/Swan, in addition to those involving the financing of the acquisition of Saab. Such as the EIB ‘green’ loan facility (170 M euro used up so far), GM (between 300 and 400 M USD), historical supplier debts (reported at between 100 and 150 M euro), other external bridge loan arrangements for salaries, taxes etc. (aside from the money already received from PD/Y; that’s something the Chinese will solve by themselves now), the situation around the grounds and facilities at THN (appr. 50% of the value sold for abt. 30 M euro to Hemfosa c.s. and a 15-year lease-back guarantee with a non-payment clause involving cessation to Hemfosa of the remainder), the deferred payments to the pension fund…

        If the deal is that the Chinese assume responsibility for those debts as well then the half-billion euro they say they are prepared to invest in Saab will already be gone before even one euro is invested in the rebirth of Saab as a producing entity. Unless, of course, some kind of a payment-deferred deal can be arrived at with GM and EIB/SweGov.


        • I agree, there is a mountain to climb. But, with new Chinese ownership, it might be possible for GL to negotiate a reduction in debt for Saab in return for long-term commitments from the Chinese. The downside, of course, is that some suppliers might refuse, and find themselves replaced by Chinese suppliers, but that’s business I suppose.

          If YM/PD don’t want the whole thing to be held up by NDO / EIB approval, they’re going to have to find a way to re-finance the EIB debt, perhaps with a Chinese lender. Do Saab really own 3-400m USD to GM on top of the preference shares, i.e. just for parts / engines / 9-4x production / etc.?

          • Those 300-400 M USD are the prefs. But, as you may remember, these are surety for the part of the Spyker acquisition sum the payment of which has been deferred. But the obligation remains, unless GM agrees to sell the prefs at a discount. And they offered them, it has been said, to Antonov for a seriously reduced amount. Whether they are prepared to do the same for the Chinese? I wonder.

            Payment for the use of GM IP and bought-in parts is probably part of the total debt to the suppliers.


  4. Hmmm. .

    Last week NSC subscribes to 2.3 m shares at 4 a share approx, which was around $10 m. Today its 3 m shares to gem at somewhere around 1 a share = $3 million

    Should have got NSC to honor their commitment , it was on the face of it a way better deal for swan.

    Unless NSC was just a straw man negotiating tactic all along.

    • Except… NSC would have paid 4 a share on the hope of a decent deal for Saab and a good return on their investment. The complete sale of Saab for 100m Euro crystalises the upside (or lack thereof), so there is no potential upside to offset the risk taken.

      If I were NSC, and if I had been intent on investing, I’d have pulled-out now, too. There’s no value in the transaction for NSC.

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