By on October 28, 2011

On the last possible day to work out a deal before being forced into bankruptcy, the Victor Muller era has ended at Saab. The Swedish brand will now become a completely Chinese-owned company… if  all goes to plan. A press release explains

Swedish Automobile N.V. (Swan) announces that it entered into a memorandum of understanding with Pang Da and Youngman for the sale and purchase of 100% of the shares of Saab Automobile AB (Saab Automobile) and Saab Great Britain Ltd. (Saab GB) for a consideration of EUR 100 million…

…The administrator in Saab Automobile’s voluntary reorganisation, Mr. Guy Lofalk, has withdrawn his application to exit reorganisation. The MOU is valid until November 15 of this year, provided Saab Automobile stays in reorganisation.

But remember, this is Saab… and its fate rests in the hands of many, many people not named Victor Muller. Despite the air of finality that is surrounding some of the media coverage of this latest announcement, this is not a done deal. The Saab saga rolls on…

You see, I left one crucial paragraph from Swan’s release out of the quote above, to wit:

Final agreement between the parties is subject to a definitive share purchase agreement between Swan, Pang Da and Youngman, which will contain certain conditions including the approval of the relevant authorities, Swan’s shareholders and certain other parties. The consideration of EUR 100 million will be paid in installments. An important consideration for Swan to enter into the transaction is the commitment of Pang Da and Youngman to provide long term funding to Saab Automobile.

In other words, the deal itself is not done. This is simply an MOU that does not appear to be legally binding… and is only valid for another two and a half weeks anyway. Besides, the European Investment Bank, China’s NDRC, General Motors and Saab various creditors still need to approve the deal. Bertel has made the case that China is unlikely to approve any deal to bring Saab to China for a wide variety of reasons, and Reuters points out that GM is hardly guaranteed to go along with the deal.

Swedish Automobile chief executive Victor Muller, whose company is selling Saab, said he had so far only had a “brief dialogue” with GM about the planned sale, but hoped to convince them of the benefits of it.

“It is way too early to make a statement about whether this is going to be easy or not,” he added.

In case anyone has forgotten, GM “has preference shares in Saab, supplies it with parts and is a creditor.” Does GM want to be in business with Pang Da and Youngman, two bit players in the Chinese scene, when it has such strong ties to the much stronger firm SAIC? Furthermore, if the NDRC still doesn’t want the Saab deal to happen, GM might have an opportunity to win some guanxi with the government by blocking the deal for them. Otherwise, the NDRC will continue to wait out the clock, allow this MOU to expire, and kill off Pang Da and Youngman’s ambitions without a face-losing confrontation.

After all, while the west has been fixated on Saab’s dramatic roller-coaster ride, the realities have not changed in China. The Central Government still wants its industry to consolidate, sees foreign partnerships almost solely as opportunities to gain intellectual properties, and it still wants the auto industry to hold off on ambitious export schemes until at least 2015. Wedding a weakling Western brand (with no I.P. to speak of) to two weakling Chinese firms does not take the industry in the desired direction, and as the HUMMER non-deal proved, the NDRC has no need to explain itself… it will simply not give approval until this MOU expires.

But even if the NDRC does give approval, as Saab’s bankruptcy administrator Guy Lofalk claims it will, the Pang Da/ Youngman rescue plan is hardly confidence-inspiring. Per Saabsunited (from Swedish media sources),

we are estimating about 40 million euro to fund the reconstruction depending a bit on its length and for the years 2012 and 2013 a cost of about 550 million euro. After that the plan is that the operations will reach a point of break even.

So, what’s next for Saab? Two and a half more wild and crazy weeks, as creditors, the E.I.B., NDRC and GM are pitched this latest plan. But don’t hold your breath for much of anything to change. With two of the three stakeholders unlikely to approve the deal, this is probably just another stop on Saab’s downward decline. And with Victor Muller signaling that he understands that his time at the helm of Saab is over, it’s unlikely that anyone else will continue his crusade if this final deal falls through. In the meantime, North Street Capital is out of the picture, and Swan is going back to its $150m equity agreement with G.E.M. in order to raise a little more cash.

Watch this space…

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23 Comments on “Our Daily Saab: Saab “Saved” As 100% Chinese Firm… Pending Those Pesky Approvals...”


  • avatar
    JTP

    Geez, Can you guys get any more negative when it comes to Saab?

    I know Saab has been at death’s door for some time now but every time there is a lifeline thrown to them TTAC seem to hurry up and pick it apart and either tell the world how bad it is or that it won’t pass approval. It really appears that TTAC has a personal vendetta against Saab.

    I have no idea if Youngman / PangDa is going to be able to pull this deal off but I do know that the automotive world will be a better place with a healthy, well financed Saab still alive and producing cars.

    Why can’t you guys, Bertel and Edward, just give Saab the benefit of the doubt and report positive as positive instead of turning every Saab story into a negative?

    • 0 avatar
      DaveDFW

      I absolutely agree. I’m not sure why TTAC consistently displays such glee in Saab’s troubles, but the one-sided negative tone is tiresome.

    • 0 avatar
      Pig_Iron

      It does feel like that sometimes. SAAB is my favourite marque. I hope to get a nice turbo coupe for my retirement, if they make them, or I can find a decent used one. It is the best all season road machine I know of. But times have changed since the SAAB 99s of my childhood memories. Bertel and Edward have exposed the bare faced truth. I’d rather be a fan-boy with clear eyes, than find myself living in dreamy vacant hopefulness. I’m glad SAAB will survive, but it seems to me that Tstag’s comments below, are right on the mark. I don’t know a soul who’s bought a Volvo since the Chinese took over.

    • 0 avatar

      If you want to live in permanently distorted reality, then TTAC is not the place to be. This Saab story is proof that collective wishing and rah-rah-rah does not change facts. We have said that Muller’s plans won’t work, and they did not. Personally, I don’t even believe that the 100 percent deal will become reality. The Chinese would be nuts to buy into the legacy of Saab. To turn Saab into a going concern costs several billions without a bright future.

      • 0 avatar
        MrWhopee

        Besides, if you only want a pro-Saab news, there’s the Saab United site…

        I wonder how those folks would feel about their beloved Saab, though, should it came under Chinese ownership. Would they feel the same kind of love? It’s like those horror stories of a genius scientist whose bride tragically died, then he successfully brought her back through some Frankensteinian method, so there she is, alive again, but not quite the same…

    • 0 avatar
      windswords

      For a long time now I noticed that various blogs/blog writers/commenters have an attitude similar to the Romans who entertained themselves with the gladiatorial games: they want some blood. GM, Chrysler, Ford or in this case SAAB. With talk of “carmeggeddon”, predictions of the automotive version of the apocalypse and death watches there is a lot invested emotionally in the automotive blogasphere for someone, anyone to go down. So far we’ve seen brands go – Pontiac, Saturn, Hummer, and Mercury. But not entire automobile companies. Ford has squeaked by, and BR and government money has saved GM and Chrysler. So now the attention has turned to SAAB. Hopefully this blood lust will dissipate once SAAB’s future is finally known. I believe our discussion time is better spent on other topics than who will be the next to die.

    • 0 avatar
      wmba

      I read saabsunited after each TTAC post just to see what that bunch of cockeyed optimists have to say about things. In a universe where black is white, and where Saabs stride as the Giants of automotive virtue, a smile from Victor will bring a good 50 posts from self-hypnotized strait-laced delusionals, primly aware that automotive goodness begins and ends in Trollhatten.

      If you enjoy flights of fancy, then I can recommend no better site to wile away a few pleasant minutes. Today they received a metric ton of pixie dust and gaily spread it over all things Saab, enhancing even further the gap between Saabs and all other merely normal cars. The reorganizer, Lofalk, received the largest dose of this magic dust, and says the Chinese NDRC has been contacted and they think the new deal is just peachy keen. Cue loud huzzahs all around, as true Saabinistas rejoice at the beginning of a new age of world automotive domination – the Chinese market is next to receive the full worthiness of the best cars in the world.

      On the other hand, the Toronto Star says:

      “Unfortunately, Saab is run by a bunch of sentimentalists who continue to think the brand
      is relevant, despite Maybach-like sales numbers. Although Canadian Saab dealers continue
      to hang out their shingles, (mainly to generate revenue from servicing the
      notoriously unreliable vehicles) with sales of only 93 copies of its 9-3 compact
      and 45 examples of its “all-new” 9-5 sedan, someone needs to put a fork in
      Saab. Please.”

      Amen.

      • 0 avatar
        eldard

        We’ve long known that anyone who buys a Swedish car for the price of a German is clearly delusional. lolz In light of this, I hereby present this glorious German commercial: http://www.youtube.com/watch?v=8I5BGsK5ZAU

  • avatar
    Domestic Hearse

    I’m tired of Saab. So I’ve turned my attention to something more interesting…the Swedish Chef. Did you know that he was operated simultaneously by two muppeteers (originally Oz and Henson together)? That his introductory song always ends in the words “bork, bork, bork”? He’s one of the few muppets where actual human hands are used? That within each phrase of Swedish gibberish is an English word cue? Clever programmers around the globe have created Swedish Chef translation tools which will turn many different languages into Swedish Chef lexicon? Norwegians especially have adopted the Swedish Chef into their humor, mostly because of the friendly Scandinavian rivalry they have with Sweden? That the muppets would have a better shot at resurrecting Saab than the Chinese? That it’d be funny if a Saab navigation unit gave you step-by-step instructions using the Swedish Chef’s voice? “Turn orbi torba werb here, bork, bork bork.”

  • avatar
    bunkie

    As the son of a Danish father (who was a professional chef) and a Swedish mother (who was also a professional cook and restaurant manager), I can attest to the inter-Scandinavian rivalry:

    My dad loved this joke: “Did you hear that researchers have discovered a substance thinner than water? It’s called Swedish beer”.

  • avatar
    jeff_vader

    Can Victor Muller please negotiate my next payrise? Talk about charming the birds down from the trees.
    Anyway, yet again all this deal is at it stands at the moment is yet again, “the moneys coming! the moneys coming! Honest!” Just like Mr Chamberlain in 1938, he will walk into the creditors meeting on Monday with a piece of paper saying “Look what the Chinese have promised, we just need a little more time..”
    Surely, a majority of the creditors will come to their senses and demand bankruptcy? The company didn’t even have the difference to make up the shortfall in the wages for this month & what was that? $100,000? And as has been pointed out above there is still so many approvals that could go wrong. Are GM really going to let PangDa/Youngman have the new 9-5 and the 9-4X with all its attended IP? Are NRDC going to say “Well this is a new deal,so its back to square one?”
    Lets put it this way, if you were a creditor and Muller owed you $1.1 million dollars since May would you believe him one, last, final time? Or would you say gimme my money?

    & Domestic Hearse? If you make that Sat Nav, I want one.

  • avatar
    Tstag

    For the first time since this all started i have a feeling Saab may just survive. For a start GM may want it to go bust bust they won’t want to upset the Swedes so I doubt they will block a deal. As for the Chinese government I’m not sure they will block it either. Simply because if Saab goes bust then China gets nothing. No brand no tooling. This way they can lift and shift production lines home. Grab a valuable brand and set up a small Ckd operation in Sweden to keep things authentic (a la MG).

    finally don’t be conned into thinking Saab will be owned by these 2 Chinese companies. I’m willing to bet they will reorganise Saab. Take the heat for lifting and shifting the tooling and then flog the lot to someone like……. Geeley who coincidentally own Volvo.

    Watch the Saab factory go….

  • avatar
    seanx37

    GM is not going to let some little Chinese company have its technology. Everyone knows this.

  • avatar
    eldard

    We have a saying in my country, “No matter how long the procession, it always ends in the church.”

  • avatar
    SilverHawk

    From the day he bought Saab, Muller knew that the company needed deeper pockets to survive. His original business plan was simply a display of smoke & mirrors, while he sought the cash he needed. It’s unfortunate that he put Saab through the embarrassing trauma of this years events, when he knew all along that he needed help. Yet, he will probably be remembered for keeping Saab alive after the GM sale, and his business failings will be forgotten. In the meantime, I sincerely hope that the Saab brand is also given the same benefit of the doubt that the fans bestow on Muller. Saab is worth saving. Muller? Not so much.

  • avatar

    Found this comment on the internet: “All I know – if I’m ever wheeled into the ER after collapsing, I sure as hell hope Victor Muller’s manning the defibrillator that day”. Let me guess what GM’s position could be. It might see the Saab sale to the Chinese as an extra foothold in the largest and fastest growing car market in the world, as an extra outlet for GM parts and the chance to generate income as a venture partner. It avoided losing its face because Victor Muller “took care” of navigating this Viking ship through the “Perfect Storm”. GM may well be the biggest winner of them all.

    PS: ever noticed that there’s a red dragon in the Saab logo… facing westward?

  • avatar
    jeff_vader

    500 job losses annouced this morning.


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