Press Releasse: Swedish Automobile Continues Discussions With Youngman

Trollhättan, Sweden: Swedish Automobile N.V. (Swan) announces it is in discussion with Zhejiang Youngman Lotus Automobile Co. Ltd. (Youngman) and a bank in China about an equity interest in Swan. The discussions include a short term solution to enable Saab Automobile to pay the November wages and continue reorganization. The outcome of the discussions is still uncertain. Any possible transaction would be subject to the approval of the relevant stakeholders.

Swan will keep the market informed of any developments.

This just confirms what we have heard yesterday. Now we have to wait for GM and the NDRC to approve it. I hope for the Saab employees that the short term solution is not also awaiting approval.

75 thoughts on “Press Releasse: Swedish Automobile Continues Discussions With Youngman”

  1. All fingers, toes, arms & legs crossed for a a positive outcome….
    And right now I am not picky what “positive” means, anything that can get Saab to build cars again…
    Can’t believe this drags on, it’s like the worst kind of tv soap…
    Still, I believe in happy endings!
    😉

  2. This proposal with Bank Of China (state controlled) would never have been possible if the NDRC was going to say no to the deal. It all depends on GM.

    Come on GM, let Saab go 🙂

  3. Swe Gov: ” the government does not have any comments on that Muller is included in the future and that it was not his fault that he received money from the wrong person”

    VM sais its not Bank of China, “Its a Bank in China” big differens there.

  4. Whatever bank that is it should be Chinese.
    First milestone would be salaries to be paid today (i.e. signs from GM that solution will be ok).

    And I’m not surprised the bank’s name is kept secret until the deal is cleared by GM.

    How’s GL this morning 🙂 ?

  5. “A bank in China?” Sigh. Just slightly less vague than “a bank on earth.”

    The false report (Bank Of China) sounded good. The real report smells a bit like North Street Capital, Shanghai Division.

    • Pessimistic as usual? 🙂

      They can’t share everything with the world this early; at least the recipient of the proposal (GM) should have some minutes to look at the deal before telling everyone and his dog, IMHO.

      “False report”? There are always rumours and misconceptions.

      • Come on. The information was untrue. False.

        You are quite right though – if it had been reported under the headline “Rumours And Misconceptions” then it would have been a true report.

        • Bank Of China name was brought in by Swedish Television.
          SU only picked up the news as did Reuters and all other news agencies yesterday night.

        • Well..
          Everything reported on Saab /SWAN/SweGov/NDRC/EIB/GM etc. in all media outlets falls under that headline.

          So everything is false and untrue until proven true. or viceversa..who cares.
          We will know what is going on when the involved entities makes a complete statement.
          I suppose we will hear from GM first.
          Then lets take it from there.

  6. I believe the deal was structured through Deutsche Bank who also dealt with the bids for buying SAAB from GM back in 2009 .
    So let’s stay optimists about the Chinese bank, I don’t think there’s a problem there.

  7. Is it shares in Swan or Saab?

    This article: http://saabsunited.saabklubben.se/2011/12/the-deal-2.html

    Talks about:
    SWAN: 50.1%
    Bank of China: 29.9% (read: bank in China)
    Youngman: 19.9%

    The press release mentions equity interest in Swan:

    “… is in discussion with Zhejiang Youngman Lotus Automobile Co. Ltd. (Youngman) and a bank in China about an equity interest in Swan …”

    I.e. as in the old agreement, shares in Swan. Perhaps “SWAN” should be replaced by the owners of Swedish Automobile in the other article?

    But since Swan owns Saab that would mean shares in Saab in the end of course, but Swan can’t have shares in Swan.

    Then it’s a different matter that the numbers mentioned doesn’t equal 100%; or it’s simply 19.9+29.9, and the rest goes to the majority owner.

    • They will probably issue new shares in SWAN and will sell them to YM and Chines bank.
      That would makle current SWAN owners hold only 50.1% of the new shares in SWAN.
      Same structure as the deal of last summer.

    • I can’t imagine that Youngman will take a minority stake in SWAN, which will then have a majority stake in Saab. Under that scenario SWAN (read VM) will still control the situation and be able to allocate monies as they (he) sees fit.

      One way they might be able to do this would be by issuing a convertible pref in SWAN, which converts to equity after GM’s IP is effectively antique. But I can’t see GM wearing anything that would give Youngman control of Saab via SWAN, and I can’t see the Chinese investing so much capital without having complete control.

  8. Are there any time contraints on signing off this ‘plan’? (i’ll refer to it as a plan as it won’t be a deal until its signed off by the interested parties) I mean, do GM have a certain date when all this needs to be approved or is that date the next time the wages have to be paid?

    • If he is blocking the deal, as you say, then he can’t think very highly of it’s chances of success.

      I still believe, despite the prevailing sentiment here, that his role is to look out for the best legal solution for Saab and its creditors and that can put him at odds with what saabs owners may wish for.

      A band aid that kicks the problem down the street, or reduces the remaining value of the assets – if it ultimately fails – are things he has to evaluate, as well as simply saving the company.

      It’s not an easy role, certainly in a high profile, emotional case, like this one is.

      • Well , it’s not his view of success in any way. His mission was unfurtunately to sell SAAB for peanuts to anyone interested and to get SWAN away of the picture.
        And yes, that’s what he’s been pushing through all the way down.

        I agree it’s not easy for him in such a high profile case though with so much at stake.

      • Well, he should, as an administrator, understand that Saab has contracts with GM; that Swan has contracts with GM, and should have, if he was looking for “the best legal solution for Saab and its creditors”, tried to create a solution that would work. 100% Geely wasn’t such a solution, 60/40 YPD wasn’t such a solution; it would take quite many trips for GL back and forth to change that, if ever possible. So, he should have come up with something else.

        Now it seems to some that Swan et al is irritated on the administrator because his solutions would exclude Swan from the future of Saab; I don’t think that’s the case given the above. GM is a part of this, and a solution must work with all parties involved. What the Swedish government wish, if anything, or what GL thinks is a good solution doesn’t matter, if it doesn’t work with the involved parties. Period.

        I think it is good that Mr. Hans Hugenholtz, the Chairman of Swan, puts down the foot and asks for a meeting with the departments and the NDO about the ownership questions. It has been so easy for several to dismiss VM as if he is Swan. Now they’ll have to answer some questions what they are up to at the departments, if anything. And they will now have formal complaints about GL’s activities.

      • I have a problem with this line of thought. Surely GL’s responsibilities are to the company’s creditors and then to the owners (i.e. SWAN). If the creditors are paid off, the company is placed on a firmer financial footing (by paying off the EIB), then there is no need for any further opinion from him and company should emerge from reconstruction. Whether or not the company might be shaky for the next 2-3 years really is irrelevant. Now, if the plan for reconstruction is to defer payment of the creditors for some period, then he would have a say otherwise no.

        (Thereagain, I only know US Law and not Nanny-state Law)

  9. @Tripod, you are right! The Chinese companies will invest and will become part owners of Swan.

    They will NOT (directly) own a part of Saab. They are only partly owner of the company that owns Saab.

    After this deal Saab will still be owned for 100% by Swan.
    (except for the 0.0000005% GM owns)

  10. Hmmm. This seems a lot more tenuous than what was thought to be the plan yesterday.

    Extrapolating on the prior numbers agreed, buying 49.9 percent of swan would be around 66 million eur. (49.9 million for Saab, and 16 million for spyker, till that co sells)

    Buying into swan does not in itself mean anything for Saab.

    So how do Saab , which may need to get recapitalized itself, (referring back to the stock liquidity posting) as well as massive funding for all it’s other issues get it, when the majority owner doesn’t have the horsepower of the others?

    Normally this would mean the shareholder that couldn’t participate in a capital injection would get diluted….and now you are back in gms bad books.

    Hope it works.

    • I suppose you can explain how did you get to those figures?
      I suspect you probably refer back to the last MOU whcich included Pang Da and which is by now DEAD?
      In the new plan, Pang Da is not a part owner.
      Why not looking further back and you will probably get a more accurate picture of what the figures should be , in my opinion.

      And by the way, Chinese want to buy into SAAB for technology, SWAN is the owner of the technology under the licence agreements with GM. The Chinese cannot directly buy the technology from GM.
      So they have to pay a premium. Just as in any other business.

      • 100 million eur was the number swan and ym, with others had agreed was the value of saabs shares.

        These shares currently have less real value on a daily basis , not more, and buying a minority stake has less value than a controlling stake.

        Generally.

        If young man want it at any cost, well, that would be different, and normal rules go out the window.

        • I know but I wouldn’t count too much on anything that deal was made of.
          I think it’s clear that the deal was the only possible exit for anyone before the creditors meeting given the situation in which Lofalk had brought Saab into.
          Remember he went out to Geely and propose them to buy Saab for 20 millions. YMPD then proposed the same amount and Swan rejected it.
          Back in june, 245 million euro were to be invested in Swan equity by YMPD though.

          • Buying saabs shares for 1 kr, 20m eur, 100 m eur or 254m eur is kind of immaterial, from Saabs perspective.

            At that moment you, the buyer, are the proud owner of the problem, and at that moment not one cent has gone into SAAB to strengthen its balance sheet in order to pay off outstanding creditors and build a business back up etc.

            Buying swans shares, just makes it one more step removed.

            • Of course, and we all know that; it was discussed earlier this year when some dismissed the 245 MEUR as not being enough. It wasn’t meant as an investment in Saab’s development and to pay debts etc. Everyone ought to understand that. But that isn’t interesting now; it’s about finding a structure that can be accepted by all parties.

  11. “Is it a Bank in China or the Bank of China?” reminds me of “The Judean People’s Front or The people’s Front of Judea” from Monty Python’s Life of Brian!

    “Vladimir Antonov? He’s not the Messiah…he’s a very naughty boy!”

  12. A source sais “It is likely that GM says no to the new ownership solution that will save Saab, since it is just a diversion structure. It says a source familiar with the process to di.se.”

    • yes , but that reason is as good as anything else.

      From this perspective, any ownership structure will just be another diversiion structure.
      Unless of course, Guy Lofalk is the genious behind it

    • This comment makes no sense – the proposed structure was created in response to consultations with GM. And from GM’s standpoint it’s not a diversion from anything — it keeps GM’s intellectual property out of the hands of another car manufacturer and also keeps the cash flow it gets from Saab’s purchases of GM parts alive.

      This comment, more than anything else I’ve read up to now, shows that Guy Lofalk has an agenda other than finding the best deal for Saab.

  13. Someone once made an analigy between the situation at Saab and the political situation in Belgium. I find it quite interesting. Belgium spent more than 500 days without politicians being able to agree on a plan to form a new government.
    When nobody was believing anymore in a solution, S&P degraded belgium and the interest rate for government bonds reachde 5.9% putting the country very close to the circle of Greece, Spain, Portugal, the Deal came up !!!
    And today it’s oficial , negotiations are completed and a new government will be in place.

    Let’s hope the analogy works till the end =)

  14. I’m not sure why Antonov keeps coming up. He’s under arrest and if proven guilty will be jailed, most probably in Lithuania. Can’t have any bearing on Saab’s situation now, surely..

    If taken at face value, this deal looks promising and doesn’t seem like it would cause GM any major headaches. Some good news around now would be most welcome!! Not sure how much more of this drama I can take! :)))

  15. As long as the official announcement states ; ” SWAN is in discussion with…..” it means that NO DEAL has been concluded yet.
    So it will just be business as we know now for months.
    I do not want to be negative but we need to stay realistic and do not think we are close to a deal.
    For me a deal is a done deal, not just anoy=ther plan that needs to be presented to who knows how nay stake holders for approval.

      • I would imagine that there is a difference in what can be said in a public official press release, and what the actual content is.
        As long as there is no definite Yes from GM, there is no deal, and the work done is only discussions to form a basis for that approval.
        As the details and formulations count in PR, please note that “the outcome is uncertain”, and “any transaction is subject to approval” is about as far as you can go without an actual approval of the suggested deal

  16. “The reconstruction can be interrupted at any time, partly because the employees are still without pay in November.
    Guy L work with a parallel proposal. but rumor says now now that he is preparing that the reconstruction ends..”

    Same source to DI

  17. Off topic, but nevertheless interesting, as it highlights GM’s own difficulties in Europe (directly quoted from Leftlanenews):

    “GM Vice Chairman Stephen Girsky, who recently took over as Opel’s supervisory board chairman, was quoted by Financial Times Deutschland as saying: “Unfortunately, our plan for making Opel profitable this year did not work.”

    Girsky is said to be deep in the midst of working out one last plan for Opel with the company’s leader, Karl-Friedrich Stracke.

    Analysts have stated that Opel’s nine lives are running out almost as quickly as patience in Detroit. Despite the German division’s contributions to GM’s engineering and technology, it has failed to make money on its own. In part, the problem lies with Opel’s dependence on Germany for vehicle production. Germany is one of the most expensive labor markets in the world and Opel lacks large profit margins because it does not have a premium volume division like chief rival Volkswagen’s Audi brand.

    Girsky, who reportedly convinced GM’s board in 2008 and 2009 that Opel should not be jettisoned, has been tasked with dramatically cutting costs in a region where the dominant currency – the euro – faces its own questionable future.”

    My guess: GM will think twice before letting Saab die. If IP rights are properly addressed in the new proposal, Saab will have a chance.

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