Victor Muller will no longer have a problem reaching a quorum or a unanimous decision at Saab board meetings. Muller is the sole remaining director. The rest of the board bailed.
The surprising deserter is Kristina Geers, who is also the corporate counsel. Her departure was confirmed to Göteborgs-Posten by Saab’s Communication Director Eric Geers, who happens to be Kristina’s husband. Officially, Kristina stepped down from the board on June 23, which happened to be the same day Saab announced that it cannot meet payroll.
The labor representatives on the board, Hokan Skött, Chairman of the metal workers union IF Metall, and Annette Hellgren, shop steward at Saab, had jumped ship earlier. According to TTELA, both tended their resignations “early last week.” Skött told the Göteborgs-Posten that he had left “Tuesday or Wednesday.”
It is possible that they left because they did not want to support the decision to stop payment of staff. The union members certainly do not want to be caught doing this, and a corporate lawyer would be aware of the consequences. However, the three members could have outvoted Muller in a boardroom brawl.
Another explanation could be that the departed board members did not want to be drawn into bankruptcy proceedings. Wholesale walk-outs of board members before impending insolvency are not uncommon.
Maria Karlsson, Associate Professor of Civil Law at the Gothenburg School of Economics, harbors similar suspicions. She told Göteborgs-Posten: “Why díd they do that? Do they believe they can shed personal responsibility?”
To ward off bankruptcy, Saab needs money real fast. Today, the unions will most likely submit formal demands for payment (according to Dagens Industri, each worker has to file individual papers). Then, Saab has seven days to pay. If no money has arrived in a week, insolvency proceedings can be started. The union is under pressure to do this, because workers will only qualify for unemployment benefits when the company is in bankruptcy proceedings.
Saab’s big hope is on selling and leasing back the factory. Even that deal does not look like it will make money flow real quick. Swedish real estate magnate Hemfosa AB is “ready to buy and lease back Saab’s factory, but Saab’s complex financial situation makes a deal difficult,” Reuters says, citing Swedish media reports. Holding up a deal are “the European Investment Bank loan and a little money from Pangda and Youngman,” Hemfosa CEO Jens Engwall said. There are other considerations. Henfosa doesn’t want to buy a property and lease it to a tenant that cannot pay the rent. “Theoretically, you can value the property empty or with Saab in,” Engwall said. “But it would feel better if we bought it in the belief that Saab had a reasonable chance of survival, otherwise it would be a little meaningless.”
Should Saab be heading for collapse “we, perhaps, wouldn’t buy the property at the current juncture,” Engwall said.
So now we have Saab heading for collapse because of a serious cash flow problem, and the cash flow problem might not get solved, because the company is heading for collapse.
Update: Saab has the following press release:
“Swedish Automobile N.V. (Swedish Automobile, formerly Spyker Cars N.V.) announces that a Chinese company placed an order to purchase 582 Saab vehicles with a total value of EUR 13 million from Saab Automobile AB (Saab Automobile) and the full pre-payment is expected to be received this week, providing Saab Automobile with short-term funding to pay the wages to its employees and make partial supplier payments. “
The good news are immediately followed by a disclaimer:
“Swedish Automobile and Saab Automobile continue their discussions with several parties to secure additional short-term funding to restart production. There can, however, be no assurance that these discussions will be successful or that additional short-term funding will be obtained. Discussions on the sale and lease-back of the real estate of Saab Automobile are ongoing.”
The unnamed Chinese buyer is a bit odd. Don’t we all know that Pangda has an exclusive? Why the secrecy?
In the meantime, Swedish supplier ANA remains unimpressed by the good news from China and laid off 75 people connected with work for Saab, TTELA reports. The company had given notice to 18 workers just last week. ANA’s CEO Joachim Lind called it “a business decision based on the information we have on Saab.”
Expressen reports from a news conference where union chief Cecilia Fahlberg, accompanied by general counsel Martin Westfält said she is ready to put Saab in bankruptcy if wages will not get paid. Asked what would happen if the Chinese money shows up, she said: “There may be similar problems in July.”