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.
A daunting task, but where there is a will there is a way. I trust that legal counsel has vetted this option.
+1
Precisely what is needed, no approvals. Fingers crossed and optimistic again.
A glimmer, just a glimmer.But let’s hold on to it…
Such an easy, difficult solution. Come on Saab!
How can that money be transferred without the NDRC approval ?
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.
Thanks for the clarification.
I am heartened to see that Youngman wants SAAB so badly. Chinese firms do not have the reputation for behaving this way.
But why would Youngman ever wants to do this, putting so much money in a company if they dont own anything? What would they get in return?
I’ve been saying this for weeks.
Hope that Saab import the Chinese built 9-3 and sell it right under GM’s noses!
Exactly my thoughts Dave.
I still have hopes of owning an NG 9-5 Sport Combi one day. I’M WITH VICTOR!
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.
could even be a very good outcome, if the money is there and decisions are taken in sweden….
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!
I agree with both your statements…. which is a problem for Saab. A lot of us Saab fans are thrifty lads…
I’m with Victor. It will be all best done without any approval from GM!
+1
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….*
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.
It’s too important to some of us to be “fascinating theatre”.
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.
I think we are saying the same thing.
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.
You may be getting legal advice from the same team that worked on the North Street Capital agreement.
Meaning?
This is a perfectly legal way of coming in.
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.
I might be wrong, anyone can be. but as I said before: Looks like trick on GM to me.
Partly agreed.
Trick by VM, compromise of YM.
+1
So whats in it for Youngman. This doesnt make much sense to me and why would the NRDC approve such a thing?
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
Oh..me thinx, not to be mistaken for facts 😉
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.
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!
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.
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..