It’s Always Darkest Before the Dawn

Just when we thought the situation couldn’t get any more complicated, one of Saab’s greatest allies who enabled the sale to Spyker in the first place was arrested and charged with siphoning assets. While he’s of course innocent until proven guilty, his bank will now be liquidated and it’s safe to say his life as a high flying financier is about to change dramatically. The timing, to put it mildly, couldn’t be worse.

So how does this affect the sale of Saab? Fortunately, Latvia’s Financial Services Authority FCMC isn’t going to pursue the money loaned from Antonov to Victor Muller’s company Tenaci over a year ago.  In an email to TT reported by, they wrote that it’s not part of their mission to recover funds in a case like this. Whether that means Tenaci is now free of debt to Antonov is dubious, merely that Antonov if found guilty would be on the hook for the money that is missing.

Amazingly, most of the parties don’t seem to be deterred by the news, aside from making sure that the sale isn’t encumbered by any legal challenges by the developing Latvian situation. We’ve heard that even GM isn’t terribly concerned about it, much more about conditions necessary for a transfer of ownership (and who they’re willing to allow to own it). Though negotiations continue in all directions, there are signs coming to us that progress is being made on multiple fronts. All parties understand the urgency given that salaries are past due, and they’re simultaneously trying to protect their own bottom lines while preserving the deal. It’s as if they’re juggling while walking a tight rope. The news that the FCMC isn’t pursuing Tenaci’s debt should help ease at least one possible path to Saab’s rescue, which at this point appears to be the path of least resistance. Whether or not all sides choose that path is anyone’s guess though (edit: sources in the know say the structure of a deal that GM will approve is near).

Much has been made of Pang Da’s statement that they couldn’t meet the salary deadline per the NDRC’s instructions. Many have also speculated on the conditions for the NDRC’s approval of the deal as if it’s diametrically opposed to GM’s. I’d advise you not to overanalyze or fall in any of those traps. It comes down to simple economics for all parties, and GM and the NDRC through Shanghai (state) owned SAIC are tied fairly tightly together, however indirectly they communicate. At the same time, Youngman and Pang Da through Saab’s technology have a long term potential to build and sell Chinese made cars that anyone could recognize. There are ways that have been communicated to us for all parties to come out with their interests protected, and for the NDRC to ensure that their strategic plan for Chinese industrial growth stays on track. There’s no point in trying to figure out what those conditions are, it’s simply worth noting that discussions aren’t as black and white as some press outlets suggest.

Also, you’ll remember Antonov still owns half of CPP (the other half being co-owned by Brendan O’Toole) and they most recently acquired the Bowler brand. Also, they produce the bodies for the new Spyker Ailerons and even limited edition Aston Martins, among other exotics. Whether or not Antonov wishes to remain the owner of this is now in question, and we’ve heard rumblings that he may want to unload it. Hopefully there won’t be any disruption on that end either.


On a side note, I haven’t posted much lately because the constant speculation in the media and grasping for straws has been pretty exhausting. You can cut the tension in SU’s comments with a knife, and the anxiety level that’s been exhibited by some readers here seems to be contagious. I’m hoping we can all keep calm, and trust that those negotiating for Saab’s survival understand that given the time, shareholder, and negotiating constraints, there are very few paths left to take. I’m confident from what I’ve heard that they all know this, and that means that finally there should be some progress on reaching an acceptable deal.

Guessing at outcomes, speculating blindly, or just venting anger or frustration isn’t going to solve anything. Comments at this point do little but stir the pot, and I’d ask everyone to think twice before posting their opinion. I considered closing comments for this article, but I have faith that we can all stay constructive with our tone. The purpose of us reporting about the negotiation is only to keep everyone in the loop, not to debate the finer points of a deal that isn’t even public. If you haven’t familiarized yourself with the website policy, follow Tim’s advice and look it over. It’ll take less than a minute of your time to read.


31 thoughts on “It’s Always Darkest Before the Dawn”

  1. As what the other people have made as an reaction: I also would write that this is great and i like it too!
    Jeff, thank you for what you have wrote in this topic!

    (Sorry for my bad English, but i’m trying my best.)

  2. Indeed, a nice post. One question however and I am sorry but it is my nature to ask questions. Though Latvias’ FCMC indicates they do not intend to engage in recovery from VM’s company, that still leaves Lithuania.

    I know nothing of the Russian, or former associate states of course, but here even though an agency decides not to pursue an action there is still a large question that lingers. He may not be found guilty in criminal court however here in the US there is still the chance of a Civil Action. Now the bad news about civil actions is that they do not carry the same preponderance of guilt for a finding against the defendant. The worst case is that someone is found guilty of a criminal charge and then of subsequent civil charges.

    For instance, here in the US, Bernie Madoff was certainly found guilty in a massive fraud and is serving time. The victims of the fraud are now engaged in what is called a “clawback” action to recover money from persons who did benefit from the scheme. You can be subject to a recovery action in many ways from a class action suit where many victims join or in a series of individual suits.

    How does the Russian law work. I hate to be negative, I really do but I have watched too many things go wrong just as everyone kicks back and relaxes. This seems to me to be still in the process of discovery. There may be a few lesser individuals indicted who send this off on a different course entirely.

    Now, pop a beer and relax, it’s Sunday and even the government rests on Sunday.

    • Great questions Rally. I know very little about the ramifications of the Antonov developments, but from how it sounds like it’s shaking out, it’s on Antonov to recover the assets he lent out, whereas the central banks will simply seize all of Antonov’s assets. It’s that separation that is key. Whether or not that remains in every case we’ll see. Let’s hope it does, because Spyker had access to other funding sources beyond Antonov at the time of the sale, and would never have taken the loan if it knew the money was allegedly skimmed off the top of a commercial bank. If the allegations are true, it’s on Antonov to return the money, not Swan. Swan still owes a debt to Antonov, but not to a central bank in that case.

    • Brands that were always close to my heart are:

      Land Rover

      If I had to buy a new (or pre-owned) vehicle that is *not* a Saab, it’d be an Audi A4 Quattro, Mazdaspeed 6 (or Mazdaspeed 3), the new Mazda CX-5 (or pre-owned CX-9). I’d never be able to afford the new LR Evoque, but it’s a good daydream vehicle 🙂

      • Mazda 3 or 6. Sorry, are you serious? As far as ‘the drivers car’ you can get imo. The ergonomics and seats have always been terrible, no performance but quite reliable I guess.

  3. A well-written article by someone who has more insight into this matter than almost anyone else at this. I still have faith in Saab, although it’s beginning to wane a bit.

  4. This post was just what SU needed. Bring it all back to more of a defined centerline. And sprinkled with a light dusting of news to keep us pacified. Let’s make this happen! Good luck to all involved!

  5. I don’t think it makes a big difference to SAAB. If the loan was obtained legally, then it is a liability. If the sale proceeds, most of the $$ will be repaid by SWAN. The only thing it does do is close of Antonov as a source for any additional funds, which he probably was not able to provide anyway.

  6. “[T]here are signs coming to us that progress is being made on multiple fronts.”

    Jeff, this takes a lot of trust to believe this. If there are signs coming to you, well good.

    But to anyone who is objectively looking at this from a distance, there are no such signs at all. At least when VM was buying Saab, most of us could see hints that the deal was going through. CJ was here telling us the deal was going through and giving us “signs.”

    I haven’t seen any real signs of a new deal going through since PangDa put up its first monies to restart production, which is what caused me to buy my new 2011 9-5. After that, all signs have been at best neutral, but mostly negative, to me.

    This time around I am not getting anything like the same vibes I got when VM bought Saab. I have been around deals all my life and you get certain ‘feelings’ when things are on the right track. I did last time. I am not getting those this time.

    Maybe if CJ jumped back into SU for awhile with some positive comments, I would start feeling better. Of course, maybe this time CJ is in no position to know, but he understands what it takes to buy Saab as well as anyone. His silence says a lot.

    • CJ isn’t involved, though we love him to death around here. Maybe he can be involved in the future, but for now he’s not. SU has new friends too who we hope you’ll get to know on a first name basis very soon. The sensitivity of the situation is such that unlike the first sale, we need to proceed very, very delicately. Hopefully when things go the way I’m saying, I’ll have enough credibility with you that you’ll be able to take things I tell you with a little more certainty. Until then, I have no problem with anyone’s skepticism. After all we’ve been through, I wouldn’t want to believe me either.

      It’s been hard to pick and choose who to believe is telling me the truth and not just playing us to give a story. Since we joined, we’ve had several such decisions to make, and I’m confident with the sources we talk to. Developing connections to any Djup Strupe is easy, choosing the one who has the ability, connections and foresight is another. Needless to say, if all shakes out the way we expect it to, everything I’ve said in every comment and every article over the last few weeks, even when I’ve run directly counter to the mainstream press coverage, should shake out to be true.

      I literally just received word of a huge development, that normally I’d want to post as a headline, break news before any of the Swedish press etc. But instead, I’ll just play it conservatively and bury it here in comments. The only people that deserve to know that something huge is about to happen are SU regulars anyway ;).

      • Jeff: I followed your comments quite closely during the last weeks. I appreciated your skeptic attitude towards the “100%-Chinese-ownership-deal”. You knew the chance that it will go through was on a very low level.
        So you are not the guy who would spread optimism when there wouldn’t be some positive indications.
        I desperately hope that a new deal will be announced very soon and that the new financier constellation combines enthusiasm AND financial strength.

      • Thanks for the post and for sharing this with us, Jeff !
        I really hope all parties will come back to reasoning and to their common sense and go and strike that deal that SAAB deserves.
        SAAB not only needs huge amounts of cash but also a vision. Without a vision it will become just another boring car brand out there and as much as some people say they will continue to support the brand in any circumstances, I have my doubts about it. But that’s just me.

  7. Here is the contrast program: Volvo just announced to increase its planned staff by roughly 10’000 employees till 2020. Most of the increase is planned in China, where Volvo will open up a first factory in 2013. Another is in planning, but needs authorities approval still. Volvo plans to double car sales within the same time frame, from roughly 430k this year to 800k+. Volvo does not see any sales slowdown up to now, and has full order books till spring 2012, according to its CEO.
    Why am I writing that? Because Volvo and Saab exhibit similarities. Both had big badly managed US carmakers as owners since 1999 (Volvo) and 2001 (Saab), and both were sold in early 2010. But Volvo was sold to Geely, a mediocre Chinese carmaker, that paid 1.8bn for the brand. GM sold Saab, as we now, to a a boutique sportscarmaker.
    Both must have similar, though not identical IP issues. Volvo had more independence than Saab in the last decenny, nevertheless they were integrated into the Premier Automotive Group (PAG), in order to have some common ground and economics of scale with Jaguar / Land Rover and the other brands of PAG. Ford resolved these IP issues by selling all Volvo exclusive IP and by admitting Volvo to all future Volvo critical Ford IP in the future. Geely in exchange has no access to this IP and cannot use it for its production. The IP deal was done months before the sale of Volvo actually happened.

    As a result, Volvo now booms, Ford is accelerating its lagging China sales this year and plans to introduce 15 new models in China till 2015 and will for sure catch up massively in China. You see the difference to GM? Ford benefits from sales to Volvo. GM is very advanced already in China. GM’s competitors in China will not be Saab or Youngman, but VW, Ford, the Koreans, the Japanese. GM does not see any income from Saab. To the contrary, their exposure risks to become obsolete, not just the equity, but also the unpaid bills, because GM as the largest supplier of Saab must be have unpaid bills as well. Ford is now very well managed, while GM still is struggling to get any reasonable strategy against a potential big client.

    • Despite it looking like GM is just being overly protective, they’re well aware of all the issues you cite. Just like there were unseen issues keeping the EIB from approving Antonov, there’s unseen issues here too that GM is aware of (not equating the Chinese to Antonov here in any way, just saying some parts of negotiation aren’t productive to speculate about). I’m sure if the same executives were in the position Ford was in with Volvo, they’d have acted the same way. They’re reasonable people, GM isn’t trying to kill Saab here, it may seem hard for die-hard Saabers to believe, but like you say, it’s in their long term interest to make sure Saab can make it in the short-medium, and even long term as a technology licensor. Don’t be surprised if you see some creative implementation to sort out the IP situation.

    • I wouldn’t call that off topic aop 🙂 GM certainly hasn’t formally rejected anything because in their minds, they’re only going to react to the proposal that comes from SWAN. What should be interesting is what happens with Pang Da next, how they’re involved, etc. It’s probably not what you think (well at least, I didn’t see it coming). I’m still optimistic about how this turns out.

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