Q&A from General Motors on Saab

Received from Djup Strupe…
Q: What agreement was reached between GM and Spyker?
Spyker has signed a definitive agreement to acquire the operations of Saab Automobile AB, subject to customary closing conditions and regulatory approvals.
Q: When will the sale be complete?
The next step in the process is approval by the European Investment Bank of loans to fund the operation of the new company during the transition. The sale is expected to close in mid-February, and is subject to customary closing conditions, including receipt of applicable regulatory, government and court approvals.
Q: How much is GM receiving for Saab?
Under the terms of the agreement, GM has transferred shares of Saab Automobile AB to Spyker, in return for both cash and preferred stock in the new company. While we are not disclosing details of the transaction at this point, we believe the deal provides fair value to GM and its shareholders, while also providing the opportunity for a secure future for an iconic auto brand. More details will be disclosed in due time.
Q: Why is GM selling Saab?
For GM to be successful it needs to focus on its four strongest brands in the U.S. – Chevrolet, Buick, GMC, and Cadillac – and on its comparable brands in other major markets. As a result, GM in the U.S. announced early in 2009 that it would sell or wind down Saturn, Pontiac, Hummer and Saab.
We believe the best opportunity for Saab’s future success lies with an owner who can build on Saab’s iconic status.
Q: How long will GM provide transitional support?
GM will provide components and 9-4x crossover vehicles to Saab for a period of time to be mutually agreed between the parties.
Q: Did you seek U.S. government approval for this sale?
GM has advised the U.S. Department of Treasury of the proposed transaction.
Q: In which countries does Saab have sales operations and how many dealers are there?
Saab is doing business in more than 50 countries around the world and has approximately 1,100 dealers. (218 total in the U.S.)
Q: Does the purchase agreement include all Saab dealers?
Saab’s dealer network is part of the proposed transaction; however, we cannot comment on plans for individual dealerships.
Q: How many employees does Saab have?
Saab has approximately 3,400 employees worldwide.
Q: Will GM provide sales and service support?
GM and Spyker are working together to ensure a seamless transition for customers. Customers can rest assured that their Saab warranty will be honored.
Q: What impact will this have on the wind down process?
Steps are being taken to implement a plan to exit wind down when the transaction closes. The wind down team is delighted to be preparing to hand the company back to management and return to business as normal.
Q: Which Saab vehicles will continue to be produced and sold?
The agreement provides for the continued production and sale of the current 9-3, as well as for the launch of the new 9-5 and 9-4X. More details to come.
Q: Will Saab leadership team and employees transition to the new buyer?
Q: What happens if the final approvals and EIB loans cannot be obtained?
GM will continue with the wind down of Saab.
Q: If so, who bears the financial risk since the deal has not closed yet?
That is spelled out in the agreement between GM and Spyker. We are not disclosing that level of detail at this time.

Djup Strupe and the weather in Stockholm

BusinessWeek/Bloomberg are reporting Victor Muller’s presence in Stockholm:

General Motors Co. and Spyker Cars NV officials met in Stockholm today to review a potential sale of GM’s Saab unit as the parties near an agreement, according to two people familiar with the matter.
GM considers Spyker’s $500 million offer of cash and preferred shares in the new Saab to be adequate, while the companies negotiate terms including those related to production plans, said the people, who asked not to be identified because the talks are private. A deal may still fall through, they said.
An agreement, which may be announced as early as next week, hinges on the Swedish government agreeing to guarantee a 400 million-euro ($566 million) loan from the European Investment Bank for the Swedish carmaker, said the people. GM also insists that Russian businessman Vladimir Antonov, the chairman and biggest investor in the Zeewolde, Netherlands-based sports-car maker, exit the company, said one of the people.

In line with current policy on this sort of thing, I can tell you that the geographic location is correct, and that Muller “isn’t there for the weather”.
It’s not champagne time yet, people, but things definitely appear to be progressing in a positive manner.
Some Djup Strupery that I can share with you is advice I’ve received from Saab personnel in several countries, stating that they’ve been booked in for a conference call with Sweden on Tuesday, January 26.

GM schedule Saab 9-5 transport to China January 15th

To those who don’t believe that the liquidation of Saab is a serious step on the part of GM, I can let you in on some inside information that’s come from a source I would normally refer to as Djup Strupe (my nickname for insiders who provide information about Saab).
In this instance, however, I’ll have to call the source “Tiefe Kehle” (Google tells me that’s German for ‘Deep Throat’).
The latest news to cross my desk is that we can expect a decision on the Saab sale before the 15th of January.
As you may know, the new Saab 9-5 is currently being made on what is basically a test line at the Saab factory in Trollhattan. There is still some tooling for this new car sitting in Russelsheim, which hasn’t been shipped to Trollhattan yet. It is my understanding from Tiefe Kehle that if GM decide to close Saab rather than sell it, then that tooling will be shipped immediately to China.
If Saab are wound down rather than sold, the new 9-5 will most likely be manufactured and sold in China as a Buick. It seems this is part of GM’s wind-down planning for Saab should they not be sold.
If Saab are sold to a new owner, this transport order should be cancelled, with the tooling going to Trollhattan.
I’ll have more on all this shortly, including a fuller theory as to what could be going on. But basically, it’s OldGM all over again.
It seems it’s easier to make a quick buck re-badging something than what it is to take a longer, potentially more lucrative course. The taxpayer might get a little bit of money right now, but they’ll likely miss out on more by forging a longer term relationship.
More soon.

Djup Strupe and the shiftings sands

I know that after posts here on the weekend, many of you think that I think there’s little hope for Saab, that GM don’t want to sell.
Let me reiterate my main statement from the weekend. This was written in bold and is my main belief arising from conversations and reading last weekend:

A conservative summation of events this year has to lead me to believe that GM needs every possible push to negotiate a sale of Saab right now – they must be compelled to do so.

This is not to say that closing Saab is a fait accompli. Not by any means. Bottom line, it means that GM are being shifty about things and they will have to be held to account. It’s going to take a Godfather offer (without the guns, of course) to get this over the line. An offer they can’t refuse.
In that link, above, I gave you a timeline that explained my hesitations about GM’s genuineness in continuing to negotiate.
Here’s another timeline for you, with some thoughts in italics:

Read more

Update on potential bidders for Saab Automobile

The picture is starting to get as clear as mud when it comes to potential owners for Saab, but there are a few things happening and several Djup Strupes have been in touch and a loosed a few cats from the bag.
The groundbreaking word over the weekend is that Renco Group have reportedly withdrawn themselves from the race and the reason shared for their withdrawal is quite possibly going to prove to be a major achilles heel in this deal. Those of you panning the Koenigsegg Group for their withdrawal due to timing issues, most likely with respect to the EIB process and associated state guarantees, should take note.
GM are reportedly anxious about anyone including the EIB loan as a condition for their purchase of Saab, but buyers are considering the EIB loan as a necessity for getting the deal done as it provides essential funding for future development. The lack of clarity with regard to the status of the EIB loan is giving everyone pause (and it’s a big reason why Ksegg found the situation too risky and costly for their own planned progress).
A snapshot of where the EIB loan is right now….
What’s needed for the EIB loan right now is the OK from the European Union. The EIB has already given approval to Saab’s loan application, but this approval requires clearance from the EU to confirm that the state guarantees attached to the loan do not contravene EU regulations on state aid. The EU has not yet given this OK.
Once that’s given, it’s been confirmed that Saab should still be able to get the loan under a new owner (it was negotiated with Koenigsegg Group in mind) as long as that new owner sticks to the business plan that the loan was based on. There will most likely also be a review of the ownership group and structure to ensure that it’s sound.
All of this outstanding work is proving to be the weak point in Saab’s situation. Buyers want the EIB loan. GM doesn’t want a sale to be tied to the EIB loan. The Swedish government don’t want to do anything more than what they’re already doing with regard to state guarantees.
Someone’s going to have to give.
Whilst Renco might be “out” for the moment, this news gives a new meaning to the phrase “out”. Basically speaking, all of the current players have a chance to be back “in” – including Merbanco, Renco and the Koenigsegg Group – if all parties can find a set of circumstances that will satisfy.
It’s a comedy to rival Abbott and Costello’s “Who’s on first” and a tragedy worthy of Shakespeare – all at the same time.
Meanwhile, Spyker are reportedly heading to Sweden this week to take a sniff around, but as much as I like their cars and Victor Muller’s charms, one finds it hard to believe that they can get a deal off the ground – from scratch – in a time that will satisfy GM.
Beijing Automotive (owned by the city of Beijing, ergo…owned by the government) have apparently nabbed the older Saab tooling they were after and news reports say they’ve got the OK for a multi-billion dollar line of credit from the Bank of China (owned by the Chinese government). So the government’s OK’d a loan to itself? That doesn’t explain yet how GM (owned by the US government) will sell it’s latest technology in the form of the new Saab 9-5 to one of GM’s own rivals in China.
So the big question, based on Djup Strupe’s intelligence and my own knowledge of Who’s on First is this: who’s going to give a little in order for this deal to get back on track?
Merbanco were not invited to negotiate further and Renco have now left the room. Those are the two remaining parties (after Koenigsegg’s withdrawal) who had the financial wherewithall to get this done. And yet all three could be back in if someone flexes a bit and allows the deal to get done.
I think it’s fair to say that this is a buyer’s market, so it’s either going to have to be GM who flex, or the Swedish government who will have to go an extra mile (they have a lot to lose here, too, remember) in order to get something across the line.
Thanks to Djup Strupe(s) once again.

Saab has at least a month, and what the GM decisions means

I’m trying to keep up with the news, but the truth is, you guys in comments are much faster 🙂
The money quotes right now….
Henrik picked this one up from the press conference:

I recognised the reporter who asked the question he´s Swedish. He asked if the deal has to be finished in 30 days, or if the evaluation is for 30 days, and the GM official answered that the evaluation is for 30 days, if there is a viable buyer, then it will be persued!
Deal has more than 30 days then!

That’s good confirmation of how we thought things might run. GM will look over the bids until the end of the month and if one is viable then it seems they’ll allow Saab to operate to a date when that deal can be concluded.
David G Mills, who’s been an attorney for the last 32 years, summed up the encouragement we should all get from this decision, quite nicely:

This is standard language when a buyer is interested in what a seller has to sell. Obviously if there is more than one potential buyer, one potential buyer should not be able to find out what kinds of offers the other potential buyers are making.
This is quite positive. I take all of this to mean that GM found the potential buyers to be quite serious, financially credible, and quite capable of making a genuine, serious offer to purchase Saab in the very near future.
Obviously GM and its board of directors must do what is in GM’s best financial interest. If GM will lose less money on the sale of Saab than it will in closing down Saab, the board owes a duty to GM to go forward with the sale. If GM can actually cover its losses and actually make a profit on the sale of Saab, then there is no question a sale will go through.
The board is duty bound to the GM shareholders to look at any offer that is legitimate and that would work out to GM’s benefit. This is especially true because of GM’s bankruptcy.
I figured an extension of the decision to sell or close Saab would occur if the buyers were at all serious, financially credible, and capable lessening GM’s loss on Saab.

If I might add my own 2 cents here…..
This is a major, major turnaround from the GM board. Do not underestimate what’s happened today.
Word via Djup Strupe is that GM previously, some time back in October, had a clear plan internally that if something happened to the Koenigsegg bid, then Saab was toast.
This decision is a credit to Jan-Ake Jonsson for his presentation, a credit to joran Hagglund for his engagement, and most of all, a credit to one or more bidders who have presented sale scenarios that made the GM Board sit up and think.
Thanks for your contributions………

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