Friday Snippets: No Deal Yet

Updated to reflect Victor’s statement to WSJ that the 54% share deal for the Chinese is “off the table.”

As we continue to report, there is a constant shuffling of deals going on behind the scenes. Unfortunately, there’s still no resolution. As such, Swan must prepare contingencies for the worst.

From Bloomberg BusinessWeek:

Swedish Automobile NV, the Dutch owner of Saab Automobile, may liquidate even if it succeeds in selling the former General Motors Co. brand, as the proceeds may not be enough to pay off creditors.

Swedish Automobile, which has tentative agreements to dispose of Saab as well as its Spyker sports-car business, will consider “all of its options,” including a voluntary liquidation should the deals go through, the Zeewolde, Netherlands-based company said today in a statement.

The transactions would raise 132 million euros ($181 million) and would be insufficient to cover the company’s 136.5 million euros in debt, said Swedish Automobile, also known as Swan. A lack of approvals and final agreements on the deals raises questions about “the future of Swan and any settlement with stakeholders,” the company said.

From SvD:

Swan and the prospective buyers Pang Da and Youngman continues to discuss the options of a business based on the letter of intent stating that Chinese companies will buy 100 percent of Saab. The letter of intent expires on November 15, but without an approval from GM, it is uncertain if it becomes a binding share purchase agreement before then, write the Swedish Automobile (Swan) in a statement.

The company also writes explicitly that if the sale of Saab does not succeed or they can not secure new financing, management will probably not be able to ensure Saab’s survival. Then bankruptcy would be a threat.

The meeting took place at the Swan’s headquarters in the Netherlands Zeewolde.

The first notice of the extraordinary general meeting ended on September 30. When the plan was that the Chinese companies Youngman and Pang Da would buy into the Swan and own 29.9 percent and 24 percent respectively. CEO Victor Muller’s company Tenaci would own 27 percent.

The setup crashed and the parties presented the October 28 a letter of intent to Chinese companies instead would buy all shares in Saab Automobile and Saab Great Britain.

Then came the shocking news from General Motors on Monday that changed everything. The car giant yesterday said it will not let Saab sell the technology licenses required to build and sell the current Saab models.

Since then there have been ongoing discussions between Saab’s management and Youngman and Pang Da to find a solution that GM can accept. The deal also requires approval from several other parties, as Chinese and Swedish authorities and the European Investment Bank, as Saab has loans with government guarantees.

Regarding the Spyker sale, as we have been hinting for a while, North Street Capital is still involved. Though the extent of their involvement has been in flux, an unreported fact. Bloomberg also confirmed this, and as SvD reports:

Since Swan also negotiating to sell the Spyker sports car business to U.S. private equity firm North Street Capital is a risk that there is no activity left on the Saab is also sold.

“It may end up as an empty company with a lot of debt,” says Patrick Beijer Mountains.

The purpose of the meeting is mainly to provide information and hear the opinions of shareholders.

Swan’s shareholders since the beginning have seen the value of the shares to fall almost 90 percent. On Friday, shares were traded on the stock exchange in Amsterdam for 0.41 euros.

To move forward, Swan is trying to gain more time and extend the negotiation schedule, which makes sense because all parties remain very interest in reaching an agreement. From

On Tuesday, November 15 is the parties’ intent out and then Youngman and Pang Da break off relations. It is uncertain whether a binding share purchase agreement is reached before that, without an approval from GM, Swan writes.

Therefore, is now negotiating with Youngman and Pang Da that may extend the exclusivity agreement, says stämmodeltagaren for

According to, the format of the 100% ownership transfer must be changed to meet approval from GM, as we’ve reported for some time.

The format of the transaction is subject to change, Victor Muller’s message at the meeting, telling the participant to

Instead of Youngman and Pang Da becoming the owner of 100 percent, which was thought as the letter of intent between the parties from the end of October, is now discussed arrangement where Chinese companies become shareholders, and Swan as well. This as a way to deal with GM.

Other blogs are speculating that they will return to the old share structure of 29.9% Youngman, 24% Pang Da, but there are many signs that talks are beyond that point. GM has certain conditions now that must be satisfied, and the deal will almost certainly change.

Saab Automobile’s former owner GM, which owns the technology that several of Saab’s car models are based on, Monday objected to the deal and said it won’t continue to license its technology to the Swedish brand following the proposed change of ownership, a move that could scupper the planned sale.

Victor Muller said Swedish Automobile and its Chinese investors are now trying to find a new ownership structure that GM can accept, but that the old proposal of Pang Da and Youngman taking a 54% share is “off the table.”

In July, Swedish Automobile agreed with Youngman and Pang Da to sell a 54% stake in Swedish Automobile for EUR245 million, a deal which fell apart when Pang Da and Youngman instead offered to buy 100% of the shares in Saab Automobile and its U.K. dealership from the Dutch owner.

Muller said the ownership structure of the July deal was “very carefully crafted” with three large minority shareholders, non of which had control of the company. By offering to buy 100% of Saab Automobile instead the Chinese investors made it very clear that they wish to take control of the Swedish brand, he said, and that is, according to Muller, the reason they now have to find a new ownership structure if the sale of Saab Automobile is to be approved by GM.

“We have negotiated ourselves backwards,” he said.

While we know the numbers being tossed around, since nothing is final there’s no reason to complicate negotiations by revealing anything at SU. This is the most sensitive time in the company’s history, and they deserve space free from endless speculation to accomplish a deal. Reporting news is one thing, getting ahead of ourselves is another.

Please continue to be patient, the teams are doing everything they can to get a satisfactory outcome for all parties, as everyone is well aware that liquidation should be a last resort. No one prefers that outcome, even most creators and GM. There is far more money for everyone given an achievable sale.

43 thoughts on “Friday Snippets: No Deal Yet”

  1. To read reports like these is just heartbreaking, and it makes me wonder how on earth Saab was managed into this situation. But I haven’t given up hope, yet..

    • Had Lofalk not pushed for 100% Chinese ownership (and the Chinese hadn’t shown their true colors and jumped at the chance) we’d be seeing a different outcome right now. They should have had much more dialogue with GM sooner.

        • Still involved but so long as there’s an MOU valid with the Chinese until the 15th and they’re willing to negotiate, there can’t be an offer. Not that there’s not talks of jumbling them into a potential solution, it’s so fluid right now that there really isn’t any reason to speculate. Just wait.

      • Seems to me to be incorrect to heap the blame on Lofalk. It was pretty clear the prior 53% Chinese deal was going nowhere and had been for months. There was nothing to indicate (to Lofalk) that it would come to fruition in time, and furthermore, that amount of money (circa 250 M eur) isn’t realistically enough to get production going again, on a long term meaningful basis.

        Saab was virtually out of cash, and Swan doesn’t have any (in fact, it has negative equity) . From a solving the riddle fast perspective, you have two options: sell it 100%, or close it. You cant go ahead and simply close it without trying the other option.

        I think Lofalk had to threaten to stop the reconstruction process in order to get the Chinese and in particular Swan to really focus on the fact that they were genuinely staring into an abyss, and I think they had to try the 100% route as there appears to be no alternative. GM’s response couldn’t have been unexpected, but it shows how far Saab is up sh!t creek, with the tide going out fast, that they appear to have hoped for the best with that MOU.

        You keep hinting about some white knight rolling in . If true, he is leaving it awful late. The patient is mighty sick at this stage.

        • I personally don’t expect white knights.

          What I expect is that the involved parties in these negotiations get down to business and act upon their knowledge and info.
          I will not blame Lofalk of anything, except being even more up sh!t creek than SWAN and Y/PD when trying to make the deals he tried to make especially that Geely thing which sems to be the basis of the 100% bid by Y/PD.
          I think the NDRC has made it pretty clear on several occations that there can be only one.

        • The only deal that would ever pass GM’s muster is the one carefully crafted so as not to have any individual Chinese majority shareholders. It had passed through every regional and provincial government approval process on its way to the NDRC at the point when Saab presented the plan and succeeded on appeal with the court. The bridge loans that Saab lined up in order to preserve liquidity were squashed by Lofalk at that point, in favor of a 100% Chinese solution. We have yet to be given a reason why that happened at this point, it could be a number of reasons from either the SweGov or Chinese positions (we’ve been told many corroborating explanations but won’t report them). Either way, Lofalk was the key conduit for blocking the deal which as GM and Muller both confirm, has resulted in the parties “negotiating backwards.”

          • Few pointers

            – After signing the ‘Deal54%’ things were not progressing as agreed. Most notably promised money wasn’t coming in. If nothing would not have been changed, the reconstruction would have been discontinued due lack of funds, and Saab would be bankrupt by now.

            – You claim that ‘Lofalk squashed bridge loans which were lined up’. Could you please elaborate this a bit, as the claim seems bit dubious…

            – Victor Muller himself has said that NDRC approving a deal where Chinese companies were only part owners, would be the “biggest hurdle”. In other words you choose the wall you want to run in to – NDRC or GM.

            – Personally I have doubts that how “carefully crafted” the PangDa/Youngman 54% deal was. After all it was put together in 4 days after the Hawtai deal collapsed. Sure some groundwork was probably there, but naturally ownership structures has to be negotiated always individually.

            And couple of unrelated points

            – You might want to consider reducing the column width of the new SaabsUnited 2.0 template. Currently the width of a single line is too long to be comfortably readable.

            – You Jeff really do like to repeatedly bring out that you know more than the rest of us 😉

          • I’m only going to go as far as Muller has gone because I don’t want to disrupt whatever is going on behind the scenes, if he announces something to the WSJ, that’s a lot different than me leaking out sensitive information. Despite the quote from Muller, which was more to downplay another reporter’s question about possible NDRC approval because this removed that as any obstacle whatsoever, the NDRC had given positive signs to the Chinese parties about the deal. I’m not sure if it was reported or not, but we’ve heard GM was satisfied with the outline of the deal before the conditions on the field deteriorated. For whatever reasons, they’re dubious about trusting Youngman now.

            And about knowing about what’s going on behind the scenes, feel free to pick up a phone and just call the involved players. I figure that since I write for a blog that’s job is to keep Saab fans informed, it might help to you know, contact as many of the involved players as possible. You should try it. Not trying to be snarky, I’m serious. It’s not like they have secret unlisted numbers 😛

            The site design is so preliminary that it’s not even worth critiquing yet. The primary concern Tim and Peter had when migrating to the new system was the functionality of plugins, user functionality, etc. Design comes next, we have to decide on css styles, new functions, etc. Let’s just see how the deal goes before we plan all that, cool? 🙂

          • Till manages to write some of the most informative articles without giving the impression that he has privileged information and without constantly trying to give the impression that he is on the deal team – personally I prefer that style.

          • Pretty simple solution to that ANA- don’t read or comment on my articles. Feel free to make your opinions without the info I provide. 🙂 Thanks.

          • Jeff. I do hope this white knight you keep mysticaly refering to isn’t North Street Capital. If you really believe they are going to be the saviour of Saab I have some magic beans you might want to buy.
            Any announcement on the 15th will just be another attempt to delay the inevitable with yet another empty promise to the creditors and the court that “the moneys coming, honest it is!”. If the court have taken into account Mullers actions in putting forward to the creditors a plan that he has since admitted he thought was going to fail, Saab has no chance of getting its Re-Organisation extended. I would imagine that some of the creditors are going to take a pretty dim view of that as well.
            With the history of failed deals & broken promises, unless this white knight turns up on the 15th with 100 million euros in cleared funds right then and there, I can’t not see any way that Saab will not be forced into bankruptcy or liquidation.

          • In no way am I suggesting North Street is a white knight that will come in and swoop up the whole company. They certainly add flexibility to the equation, though. There are backup contingencies that have been shuffled around that I’ve referred to, some of which are more viable and some of which are non-existent given the changing conditions by the hour. No doubt, the 15th and 16th will be very eventful days barring extensions or immediate terminations of reconstruction, but guessing what outcome results from the back and forth between all the parties is anyone’s guess, including everyone at the table.
            As I’ve said a few times in articles and comments, there’s really no point in guessing who comes away with what share under an acceptable agreement. And even then as you say, the money literally has to be wired right there and then. Hopefully the Chinese get the message by then, in the past as we’ve seen they’ve come up a day late and a dollar short.

          • Muller’s just trying to deflect the blame. His “carefully crafted” deal ran out of time when Saab ran out of cash.

            54% is off the table, 100% won’t work per GM. 0% won’t work cos there is no cash.

            So is there a possible window between 60 and 70 percent ? Time will tell.

        • What some people overlook is that Saab has been independently run for quite some time and Lofalk was not in control of the company when it ran out of cash.

          I also hope for a white knight (or any coloured knight for that matter) but think that realistically Saab’s best hope is that the Chinese and GM can iron out a workable agreement. Good luck to all.

          • Does it matter if he was in corntrol when Saab ran out of money?
            From all information he was in control when the prepared deals broke down possibly making some errors/misjudgings leading to their collapse and a 100% bid rejected by GM
            That one can not be placed on Saab management which personified by VM warned about this possibility

          • I don’t want to get into a protracted debate about this as we are in danger of going over old ground, but clearly, ultimately, we are in this mess because Saab ran out of cash.

          • @Krisdk

            Could you please point to the source where VM warns (in advance) about the possibility of GM rejecting the 100% deal? This “quote” is being thrown around, but I personally have seen only VM saying only after the GM rejected to deal “I told you so”.

            Would be interesting to see in which context he said this.

          • @ANA

            Yep, I think that in these forums we debate way too often about the finer details, and lose sight of the bigger picture. As you mentioned, the big picture is extremely simple – VM/Spyker just simply did not have enough money.

          • @moose

            That was a statement made after the first 100% offer which SWAN rejected
            After that it is only pointed out as the biggest hurdle in the current deal

            The source is both from here and Swedish Media and if you don’t trust that you can do the searching yourself 😉

            Regarding the finer details:

            Yes. They did anyhow do what was expected of a responsible management:

            Try to find more.

            You don’t like their efforts and results. This is where the finer details comes into play.

          • I believe part of the plan all along during the first year had been to bring in more investors. Saab admitted that they overestimated how many cars they would sell the first year (due to re-establishing consumer interest/trust, re-establishing marketing, getting untangled from the GM infrastructure, etc.), and in that first year of ramping up again, cash flow is key. If VA had been allowed to invest the money he wanted to when he wanted to, it may have kept the liquidity OK to get through this year and keep production going. But all the blockages and delays on that cut off a source of funds that might have bridged the gap until sales increased (as they were poised to do with the 9-4X).

            So, does Saab need to take some of the blame? Of course. Re-starting a company is always a a gamble, but there is also blame to go around for how many obstacles were put in Saab’s way beyond just the issue of trying to build and sell more cars.

    • GM has every right to protect its IP and its market share in China.
      SWAN, Pang Da and Youngman have to find a construction that is agreeable to GM.
      In a way a deal where SWAN would remain a major (or even minor) share holder in Saab would, imho, also be better for SWAN. The current 100% sale would leave SWAN with a very negative balance and impossible to pay off all its creditors. Staying a share holder in Saab would at least give SWAN a chance to recoup its losses, assuming that Saab would become profitable again.

      • Gerrit, I agree with you that GM has (the right) to protect it’s IP and marketshare in China, BUT as GM seems to sell more than 200.000 cars per month, only in China, Saab sales in China, and the world for that matter, would be a minor issue, especially that the respective models are not really competing…
        The problem is probably not the Saab volume but the ultimate (unknown) intentions by PD/YM in regard to the licensed IP…

        • Sorry, but I don’t agree. Pang-Da and Youngman have every intention to start Saab production in China. That could be a much larger production than the Swedish one and would definitely start eating into GM market share in China.
          There is also a lot of unrest in China at the moment with respect to an expected saturation of the car market. It is more than likely that cars build in China by a Chinese company would get a preference treatment from the Chinese government if they instate car production quotas. A huge company like GM has to take all of that into account. Their bailout shows that they ARE vulnerable and they are very paranoid right now.

          • Gerrit, I agree. We probably read the same articles about joint-venture foreign production vs. Chinese national companies, and the conflict that China faces given that their own brands are losing steam while the foreigners pick up the pace. GM needs some sort of third party as a check and balance on the Chinese as part of the final Saab deal in order for it to work. The Chinese % requested by GM will also need to be much, much smaller if you follow that logic. We’ll see how the NDRC reacts to this.

          • It is interesting though that EVERYONE would gain from ‘The Deal’ if it’s set up right.
            Saab Automobile, Saab employees, suppliers, dealers, two Governments, THN, GM, PDYM, SWAN, EIB, the Saab fans/owners etc. etc… Basically everyone involved.

            Come on folks! Time to see the common good.

  2. I never looked at it this way but it dawned on me yesterday. GM had a very good reason to sell to Spyker, or Koenisberg for that matter. Both their business plans were very optimist, and GM knew that. If by a miracle one of these buyers succeeded, GM gained a client and got rid of the responsibility for the pending warranties. In the advent of a failure, they still get rid of the warranties…

      • Saab PartsCo has always been profitable, and it’s held as collateral by the SweGov for Saab’s loans. It should remain operational through the liquidation process, barring some convoluted breakdown. In which case they should supply parts. Other parts from defunct suppliers will certainly need to be sourced elsewhere, but the legal obligation is still on GM to fill these warranty repairs. I can’t imagine the mess or cost it would be to fill these orders, and I’m glad it’s not my job.

  3. What purpose does SWAN have as a going concern once SAAB is sold? As far as I know it really has no other business other then to be a holding company for SAAB shares…

  4. TATA might be better fit for SAAB, not sure if SWAN has reached out to them or if TATA would be interested since they have taken on Juaguar and Land Rover. To TATA’s credit they do own luxury upscale cars and seem to have kept the R&D going. Sales in South Florida are decent with a least several hundred units per month vs SAAB’s several hundred for the year…so whats different is Advertising $$$$$ TATA is spending money to compete against Infinti…guys Infiniti’s new M35 is a SAAB 9-5 near clone in style. Hey I own a 2011 9-5 and when I saw the Infinit which is priced a few grand more…sending Victor. a note to look at working with TATA…

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