Saab Story: The Board Bails

Bertel Schmitt
by Bertel Schmitt

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.”

All three board members cited personal reasons for their sudden departure. There may be other factors that influenced their decisions.

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.”

Bertel Schmitt
Bertel Schmitt

Bertel Schmitt comes back to journalism after taking a 35 year break in advertising and marketing. He ran and owned advertising agencies in Duesseldorf, Germany, and New York City. Volkswagen A.G. was Bertel's most important corporate account. Schmitt's advertising and marketing career touched many corners of the industry with a special focus on automotive products and services. Since 2004, he lives in Japan and China with his wife <a href="http://www.tomokoandbertel.com"> Tomoko </a>. Bertel Schmitt is a founding board member of the <a href="http://www.offshoresuperseries.com"> Offshore Super Series </a>, an American offshore powerboat racing organization. He is co-owner of the racing team Typhoon.

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  • 1000songs 1000songs on Jun 27, 2011

    I don't know about Sweden, but in many modern jurisdictions directors remain liable for certain payables, even after bankruptcy. Those payables generally include wages and certain taxes. Given the exodus, I assume Swedish law has similar provisions.

  • Inside Looking Out Inside Looking Out on Jun 27, 2011

    The King is dead. Long live the King. Buick is the new SAAB. I do not see how it is different - same car, same engine. Higher performance Buicks (oops, Opels) - how are they different from SAAB? Aside style of course. SAAB had cool looking but low quality dashboards. Well I will miss it. I remember testing SAAB 9-3 and Acura TSX side by side. Needless to say I enjoyed Acura more even though interior design was kind of cheesy but it was of higher quality than SAABs and it had better engine, better chassy. But Audi A4 trumped both of them, even in FWD form - it just felt luxury, solid car next to 9-3 and TSX.

    • See 2 previous
    • SVX pearlie SVX pearlie on Jun 27, 2011

      The big difference? Buick sells a *lot* more cars, both in the US and also in China. That is what makes Buick different and is why it'll be around for the foreseeable future.

  • CanadaCraig You can just imagine how quickly the tires are going to wear out on a 5,800 lbs AWD 2024 Dodge Charger.
  • Luke42 I tried FSD for a month in December 2022 on my Model Y and wasn’t impressed.The building-blocks were amazing but sum of the all of those amazing parts was about as useful as Honda Sensing in terms of reducing the driver’s workload.I have a list of fixes I need to see in Autopilot before I blow another $200 renting FSD. But I will try it for free for a month.I would love it if FSD v12 lived up to the hype and my mind were changed. But I have no reason to believe I might be wrong at this point, based on the reviews I’ve read so far. [shrug]. I’m sure I’ll have more to say about it once I get to test it.
  • FormerFF We bought three new and one used car last year, so we won't be visiting any showrooms this year unless a meteor hits one of them. Sorry to hear that Mini has terminated the manual transmission, a Mini could be a fun car to drive with a stick.It appears that 2025 is going to see a significant decrease in the number of models that can be had with a stick. The used car we bought is a Mk 7 GTI with a six speed manual, and my younger daughter and I are enjoying it quite a lot. We'll be hanging on to it for many years.
  • Oberkanone Where is the value here? Magna is assembling the vehicles. The IP is not novel. Just buy the IP at bankruptcy stage for next to nothing.
  • Jalop1991 what, no Turbo trim?
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