By on June 14, 2011

Strap on the man-pants, Saab fans, because there’s another heaping load of bad news for the Swedish brand this morning. First off, Saab’s mysterious Russian backer Vladimir Antonov has backed out of a deal in which he was to buy property at Saab’s Trollhättan plant and lease it back to the company, stabilizing its short-term cash position. Automotive News [sub] quotes an Antonov rep as saying

The property sale is now being discussed with external investors

Apparently the Swedish real estate investor Hemfosa has stepped into the breach and sources say a deal could happen quickly. Antonov’s man added that his boss was still interested in securing a shareholding in Saab, a move that has been awaiting approval by the European Investment Bank for some time now. But despite Antonov’s insistence that he’s not going anywhere, the real estate deal pullout is troubling. After all, if Antonov were really the Saab zealot he claims to be, willing to support and revamp the brand at any cost, wouldn’t he want to own the Trollhättan plant? Wouldn’t he want deed to the factory in case Saab, as it exists now, goes into bankruptcy? This is the first indication that Antonov is treating his Saab involvement as an investment rather than a crusade, which is frankly a bad sign for what’s left of the Swedish brand. On the other hand, with Chinese firms chopping up Saab, what’s a businessman to do?

Which leads to another interesting question: if Antonov has been a generous sugar daddy thus far, why alienate him by cozying up to not one, but two Chinese firms? The answer lies with the EIB’s unwillingness to let Antonov take a timely stake in Saab, which needs short-term financing more than vague promises of long-term support. And though the Pang Da deal brought in some short-term cash, but much of the $352m invested by the two Chinese firms is in the form of longer-term financing, which won’t help Saab out of its short-term supplier woes. AN [sub] reports:

“What they have presented now is long-term financing, which is positive. But that does not solve today’s situation, which is very serious,” Svenake Berglie, chief executive of the FKG auto industry suppliers group, said on Tuesday.

He told Reuters his group estimated Saab’s debts to suppliers at 300-500 million crowns.

While the firm had worked out payment plans with some suppliers, talks were still taking place, Berglie said.

Meanwhile, even those longer-term deals with Pang Da and Youngman are still subject to approval from China, the EIB, Sweden and GM… which could take three months and may well not happen at all. Bloomberg has the latest round of analysts dashing cold water on any optimism surrounding the latest deal, reporting

“I have the impression that Saab is scrambling for any partner in China now,” said Lin Huai Bin, a Shanghai-based analyst at IHS Automotive, in a telephone interview. “If Saab wants to succeed in China, they need to find a sizable company with good profit and good government connections,.”

Youngman may find it difficult to convince the Chinese government to give approval for a manufacturing venture, given the company’s size and China’s wariness to allow further capacity expansion in the auto industry, Lin said…

China’s focus on controlling inflation and tightening lending may also limit the tie-up’s success, said Robert Theleen, chairman and co-founder of investment capital firm ChinaVest Ltd.

“The auto industry is low priority for the government at the moment,” said Theleen, who provides cross-border merger and acquisition advisory services for multinationals in China. “They’d also prefer to see how the Geely-Volvo deal pans out.”

There’s much, much more of that kind of analysis over at Bloomberg. It’s said that Saab would have to produce 100k+ units per year in order to even have a chance at a Chinese government approval of the deal… and Saab’s global sales record was 133k units and change. In case you’re still struggling with what this all means, here’s TTAC’s primer on learning to let go of Saab and move on. We suggest you give it a look.


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