DI.se on the New Plan

di.se report about a possible backup plan to save Saab without needing GM’s approval:

After again having been cut by GM gave Victor Muller and China Youngman during the night of Wednesday to grips with a solution in which the U.S. automotive giant will not have anything to say. This reports Dagens Industri.

A source familiar with the negotiations said to Di that the new plan means that Youngman injects billions – but without that it is linked to any ownership, and thus get around GM’s veto.

But it is urgent. It will not collect any money by noon on Wednesday will leave administrator Guy Lofalk a request to cancel the process.

In terms of size as stated supply from Youngman – probably along with Bank of China – about 5 billion SEK in the first step. Money will then go to solve the EIB loan, pay subcontractors and start production in Trollhättan again.

Dagens Industri state it was unable to find out the securities offered Youngman and Bank of China, but it is probable that these are some sort of convertible shares with long maturities.

I think this plan has a chance to work if the investors really want to get that deal done. For Youngman and the bank it would be more comfortable to step into ownership but as this obviously won’t work there is no other option. I’d expect those shares to be converted into real shares in a few years. No ownership change means no approval needed by GM. But if GM’s main demand really is that there is no Chinese ownership in Saab they should be satisfied with such a solution, too.

In another article di.se state that Victor is optimistic that this can work out:

After GM also said no to the proposed ownership constellation in which the Chinese biltillverkarenYoungman and a Chinese bank would take almost 50 per cent stake in Swan, spoke Victor Muller on Tuesday night about a “Plan C” to try to save Saab from bankruptcy.

And this plan is still alive according to Victor Muller, despite news that Lofalk wants to stop reconstruction.

“Yes,” replies Victor Muller in an SMS to the question if there is still a chance that “Plan C” will succeed.

Victor Muller confirmed to di.se that the new plan is to Youngman and a Chinese bank injects billions of crowns, without connection to any property. As Dagens Industri could tell on Wednesday, this is a way of trying to get around GM.

“Youngman would not have any shares, neither would the Chinese bank,” writes Victor Muller.

If the involved parties agree on a plan like that the lifeline for Saab could be revived through a quick cash injection by Youngman. This should be possible as soon as a new MOU is there. Sure there may be other hurdles until the final deal can be inked but it definetely looks like GM is the highest one.

53 thoughts on “DI.se on the New Plan”

    • If it is not tied to ownership then it is not a foreign investment decision, I guess it won’t need NDRC approval anymore.

      Probably, BoC lend to Youngman at a fixed rate, Youngman use that to fund preferred shares with a fixed rate dividend for some years. But I highly doubt the possibility of such transaction given the current monetary policy in China.

  1. There must be some difficulties, though:
    Why did they not apply the same with respect to VA in April? Negligence or the desire to impose VA as officially recognized shareholder?
    Why not the same solution months ago with PDYM?
    Is NDRC approval assured in this case?
    Does GM have possibilities to end supplies or take other, maybe legal steps?

    To me, the cleanest solution would be to pay out anybody in the form of loans upfront, and then convert the loans into pref shares.

    • It of course requires a certain amount of trust towards Victor to go that way.

      When it comes to NDRC – they may have to give their approval but I believe they have a certain interest to protect the investments already made. Even if Pang Da is not in the deal they get the cars they paid for so there is quite a bit of money at stake.

  2. The 9-5 is a little bit too big for me. I’m waiting for the new 9-3. Which I will be able to buy second-hand in a few years. I always buy second-hand cars. 🙂

    Saab Up!

  3. Certainly, time is one major problem here, but still I can understand if VM still is optimistic about finding a solution. Apparently Yongman and others really really eant to sign a deal, put they are putting in a lot of money, so it is not really strange that even if VM has plan A, B , C, D, …, Youngman and Pang Da first want to try the plan that would have been best for them (even although VM said from start that there is not a chance on Earth that GM will approve on that), then over to a plan that ar less good but still interesting for the Chinese and when GM said no again, over to next plan, one that still is good for Saab but which the Chinese partners would not have agreed on without trying plans A, B, and D first (sorry, I’ve lost count), just to make sure that they first have tried all other options that are better for them. But in the long term, a joint venture with Saab, perhaps with some agreement and contract about partial ownership later on when GM technology is phased out.

    Perhaps still tricky to get the NDRC approval, but perhaps that also required to really try all better (for the Cinese) options first.

    Fingers crossed…

  4. Not to be dependent from GM’s “ok” sounds a clever idea. Though, I do have some doubts that such cash flow will be done without any commitments from SWAN’s to the Chinese party that might be necessarily subject of GM’s “ok” also.

    But there is something very important others in the field should acknowledge! SAAB is obviously still that much attractive that a bank and two companies and a bank want to invest millions!!! Honestly, that means a lot and should change something in the head of people in Sweden, at GM, and perhaps in other car manufacturers headquarters.

    Honestly, I still do not understand why other (European) brands, which suffer by there continuous unsuccessful but costly tries to get established in the upper class, do not take the chance to take over SAAB as their luxury brand against German‘s big three (Audi, BMW, Mercedes). Indeed SAAB has an excellent reputation, a great name and by far a better chance to match the big Three than e.g. Renault, Peugeot, Lancia, Fiat or even Honda, Mazda or Toyota (I guess there are still more SAAB’s sold now in Europe than Lexus…any other proof necessary?).

    Overall, SAAB has obviously still a great value! It was and is a GREAT company. That should make people around SAAB proud and I hope that in some brains of the mid-class manufacturer, someone realizes the great and unique chance that is offered right now. Hurry up, soon you only can wake up a death name and such way never works very well (e.g. Maybach).

    • Your point is excellent—-with one catch: GM is a global player, so they are always going to be in the middle of it, saying “This isn’t the best thing for our shareholders because by allowing this sale, we’d be assisting our competitors.” It’s clear to me at this point that GM (and for that matter, Guy Lofalk) don’t want Saab to continue. Muller is fighting a mountainous uphill battle and I applaud him for continuing to try. I find it interesting that GM can continue to reject proposals and articulate why they can’t go along with a deal—-but that can’t seem to articulate what type of deal WOULD be acceptable to them. Typical GM Management. Typical losers.

  5. It’s like he keeps trying to pound a square peg into a round hole. And if that won’t work, try the triangular one, or the octagonal one.

    You can disguise the amount of chinese money needed to successfully save saab any way you like… But GM is going to see it as above 19.9 percent.

    So they won’t play.

    And They own the only round peg.

    • Get it. Preferred shares are de facto no ownership.

      The form of the peg does not matter. The size of the hammer is important, though.

      • I think GM has got tired of the circus this has become, and would really like to distance itself from it.

        I think they will ( as they have to this point) simply lie low, and give minimal non committal statements when absolutely needed.

        If that is their goal, then time is their friend at this late hour in the game.

        *just my observations….*

  6. eh..??

    so they want to pump money into something they wont be owners of? And GM is supposed to believe that someone who is pumping money in Saab – just for fun perhaps – without any legal ownership is not by any chance “in touch” with IP and technologies?

    GM will say NO to that too. Because this “plan C” kind of VM trick is just juggling with legal terms.
    Chineese can say as many times “we do not own anything”, GM will not swallow that.

    What sort of credible and trushworthy reasoning can Chineese give so anyone would believe it?
    Why do they pump money if they do not want to be owners – suddenly?
    What is the motivation? What are they up to?

    One would have to be stupid totally to believe they want to invest money in the company without being in charge and control the company.

    If I were GM I would smell the rat right now. This would just proove to me, chineese are not interested in Saab (if they do not want to buy it now), but they are only after GM’s technologies. If I were GM I would feel this is exactly it.
    And I would do anything I possibly could to stop Saabs access to anything from GM.

    This Plan C will backfire so badly. VM must be out of his mind.

    (Of course Saabs community will point fingers to anyone else to blaim. blabbing about conspiracies, swegov, mean world, ugly GM and so on)

    • Bingo. If this scheme is true, it sounds like it could have little to do with Saab at all, but rather Youngman wanting a technology jump start into the Chinese auto business.

      It’s fascinating theater though.

    • What about the new platform? It is flexible, can be a basis for a lot of models.
      GM can think what they want, but they also have legal obligations to SAAB. So they can not just stop SAAB from being existing, because they smell a rat.
      If I understand correctly, GM will not be asked at all this time because the ownership structure is not changed.
      GM can stop delivering 9-4 and face a legal process initiated by SAAB. Or GM can initiate a legal process claiming that the Chinese will steal their technology. That’s about it.
      I am more worried about NDRC and the Chinese state.

      • GM can’t stop Saab from existing, but they can stop providing product, which means no cars get made for at least a couple years. Imagine if this went to court, how plausible a Saab victory would be in claiming that Youngman really hadn’t in effect purchased the company.

      • Oh, they can.

        Easily. They can say (and I am afraid they will): “Dear VM and Saab, you tried to trick us and go further with chineese deal to juggle with terms (non-ownership nonsence, pretending investors are not involved) and basically go behind our backs, therefore we cancel licencing GM’s stuff for 9-3 and 9-5 and stopping 9-4”

        No contract is unconditionaly forever. and GM can go on “wrongdoing” and “breaching the trust” and so on.

        In that case, Saab would have to wait years without production for new full nonGM car to have anything to produce. Meanwhile it is customers will be gone.

        (me e.g. gave up waiting for 9-5combis production, driving new BMW5 touring instead – beside the point: it is way ahead 9-5 -feel, quality, ride- sad but true)

    • What you might miss is the time dimension. The Chinese might become owners later on, when all the contracts with GM will have expired.
      Obviously in between the IP issues and GM’s interests as stated in the all the contractual framework with Spyker / Swan will have to be fully respected.
      I can imagine, that Saab will have no more interest at all to use GM IP already in the new 9-3, even if it delays development. For sure no more GM IP in the successor vehicles for the 9-5 and 9-4x, given the complicated situation and restrictions. I don’t think GM IP is that exclusive, you can buy or license in almost everything nowadays, even higher class than GM is able to offer anytime soon.
      What Saab will be able to offer to the Chinese over time is a world class engineering, far superior to what GM is ready or able to offer.

    • Noone will ask GM for their opinion in that case. No approval needed.

      The existing contracts are there and GM can’t do too much about it. But in the end they don’t want to kill Saab, they want to avoid Chinese ownership as long as the provide their IP licenses. So they may even be ok with that one.

      • An obvious (as this would be) maneuver to mask breaking a contract, will be legally still be breaking a contract.

        I get the “trick” being attempted. It is fun talk over a drink. But it isn’t a plausible real world adult move.

        • Not a trick. GM wants to avoid Chinese ownership and they get what they want. Convertible preference shares are a kind of loan that will/can be converted into shares at a certain point in time. No ownership included. So noone is breaking a contract here.

        • I think laws and contracts are made to be respected.
          Which is , not to be broken which is what this is all about.
          I guess at this point, potentially any investor in the world could be consider a front mam for Chinese by GM. Which is paranoia.
          As long as Saab doesn’t break any contracts they should not object anything.
          But ofcourse, they will wait for the first wrong step.

      • I stated my opinon in previous reply in this conversation.

        VM is trying to trick GM and go around them. Plan C seems to me like nothing but “legal trick” on GM.
        I humbly assume it will make GM mad and at the end it will backfire badly.

        I would not be surprised if GM would pull out from licensing immediatelly of everything.

        That would change all economical figures, needed investment amounts, needed development costs, production plans and break even balance so much it would kill Saab.

    • Well, offering preferred stock to Youngman is really the last option left and it makes perfect sense because this is usually how a VC works.

        • Well selling to Spyker few years ago could have looked as a trick, since VM borrowed the money from VA and this could potentially be a trick to develop the Russian car industry.
          Convertible loans are what the name says: loans that will in few years time be converted to shares. No conspiratorial theories here. You think that the VM and the Chinese will be in love and that VM would obey to all orders from China? I wouldn’t bet on that.
          VM could have taken the blue prints and sold them to Youngman for cash couldn’t he?
          I mean what can happen that would brake the GM IP contract and that GM can not control? If Youngman comes out with the new models based on SAAB 9-5 claiming that they have IP rights, while now owning SAAB who in hell would believe them? Can someone please elaborate what are the risks for GM if Youngman gets convertibles?

    • Youngmans survival as a car maker in China.
      NDRC wll approve what they see fit and Youngmans partner in car maufacturing business in BAIC. Who would probably not be unhappy to keep the attachment to Saab IP. In 3-4 years time. And is ChiGov

  7. I assume that the licence for the Phoenix will be re-used as collateral. If I’m correct, that deal never went trough and can be of good use now to give some sort of security to Youngman.

  8. If this means the survival of our beloved Saab, then I hope it works, I really do. I just can’t shake off the feeling that they are clutching at straws with this.

    This just looks like a final effort to try to demonstrate that all that could be done, was done but in fact the writing was always on the wall.

    Sorry guys. I think this is may be game over!

  9. This has been said quite often over here: “It’s no over till it’s over”.
    But this new plan might be Saab’s very last chance of survival. VM hasn’t surrender yet, so there is still some hope.

  10. Maybe its time to start supporting Youngman thru a charm offensive and let them know investing in Saab is worth doing, and they can count on a lot of sales in the near future. Does anyone know the way to contact them thru the social media or email etc..

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