Our Daily Saab: The News Of Saab's Survival Are Premature

Bertel Schmitt
by Bertel Schmitt

Yesterday was a very tumultuous day in a tumultuous year at Saab. As it has become customary, the hectic became strongest when money was due. On Monday, payroll and social security taxes had to be paid in Sweden, and the government wants to see cash, not idle promises. That’s what created rumors of bankruptcy. It also caused Martin Larsson to step down from the board, in an apparent attempt to avoid liability.

Later in the day, the red knight from China rode to the rescue: The mysterious €3.3 million are now allegedly on their way from China, honestly now. Sweden’s Dagens Industri heard “from an industry source” that the money is now coming, to be used to pay the taxes. According to DI, “The money from Youngman had already been paid on Friday, but was stuck in the Chinese banking system and was therefore delayed.”

We had told you that you better have all your paperwork ready to expedite a bank wire from China.Converted to dollars, €3.3 million are $4.35 million. At DI, that money turned into “5 miljoner dollar, cirka 34 miljoner kronor” ($5 million, approximately 34 million Swedish crowns). Saab either received a super rate, or it’s a whale of a rounding error.

A total of $43 million has been promised to Saab. Let’s see whether it arrives. Money from Youngman has a history of suddenly getting lost in transfer.

Will it help? The usually well-informed and level-headed Sveriges Radio does not think so. It makes a quick and sobering calculation:

“The tax authority wants 34 million [SEK, $4.95 million] now and 180 million [SEK, $26.2 million] later. Payroll is 100 million [SEK, $14.6 million] a month, that’s for November and December will probably paid as well.”

There are $60 million on the back of that envelope, and it is probably just scratching the surface. All for doing nothing and for paying a workforce that has been mostly been staying at home since April. Talk about a money destruction machine, all in the name of keeping a zombie Saab officially alive. If Saab dies, the IP will go back to GM, and the brand will go back to Saab AB. Keeping it alive has not kept GM from refusing to agree to a sale of its IP to China. The brand alone is worth nothing in China, and a Saab without the technology is worth nothing the world over.

In a word, it’s a mess. No wonder that Odd Swartling, Chairman of Sweden’s Bankruptcy Trustees Board, interviewed by Sveriges Radio says:

“ I don’t think anyone has seen anything like that. But the likelihood that the company will manage to survive is very low.”

Saab hasn’t made money as long as I can remember, despite massive infusions of capital and technology from GM. It is easy to dismiss GM as someone who doesn’t know what they are doing, but you don’t become the world’s largest automaker by being stupid. What Saab needs to have a fighting chance is more than a few billion dollars, and a large automaker with the scale and know-how to make this work. That little busmaker Youngman in China has and is neither. Just look at the hash they made out of Lotus.

I doubt that Victor Muller ever wanted to lead Saab back to its former glory. He is a turn-around artist who buys companies that “need TLC”, he pretties them up and sells them for a quick Euro. With money from dubious sources who are out on bail in London, he most likely wanted to do the same with Saab. It worked for a towing company and a fashion house. The car business is the toughest business on earth. It eats amateurs alive.

Whether the near-dead will be kept on the drip will be decided on Thursday when the court in Vänersborg convenes. Svenska Dagbladet thinks that the do not resuscitate order can only be avoided if Youngman puts some $30 million on the table by Thursday, along with a credible long-term plan. Even then, too many people will have to agree to the plan to make it work, says the paper: GM, Sweden’s National Debt Office, “and the Chinese super-authority NDRC.”

It most likely will never come to that. Svenska Dagbladet sees:

“A microscopic chance that Youngman actually pays $30 million to continue the court hearing.”

Trading of Swedish Automobile has been halted in Amsterdam, pending an announcement that never came.

PS: Minutes ago, Sveriges Radio announced: “Saab has received money.” It will go to the taxman. Who tips his hat to the Chinese donor. The employees are being told that efforts to “secure the rest of the funding t required to pay salaries and continue reconstruction” are underway.

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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  • Voyager Voyager on Dec 13, 2011

    Remember the cow that would not die in "Me, Myself and Irene"?... "Today Saab applied for the court to hold an oral hearing on the reorganization matter. A small extension on the time was asked in order for all delegates to be able to make it to Sweden in time for the hearing. This was granted by the court. Foreign creditors will also be able to attend the hearing. On Monday, December 19th at 13:00, the district court of Vänersborg will hold an oral hearing with Victor Muller & Rachel Pang. The court has also asked for a brief submission on extending the reorganization beyond the initial three months stipulated by law. The basic plan to be presented to the court for Saab and Youngman is: - An outline of the Youngman & Saab deal - Funding of Saab within and after the reorganization - the current status of the reorganization The final and most crucial thing that Saab & Youngman will present is why this new deal will work when the previous ones have fail."

  • Jeff_vader Jeff_vader on Dec 14, 2011

    If anyone cares (and I'm beginning to doubt that) Lofalk today announced that he'd had enough of all the Saab Believers calling him a traitor/government stooge/GM stooge/bad man & quit. But his official reason was that he wanted someone new to judge on the new proposal that SWAN/Youngman are going to put forward in their 'oral presentation. Either that or he just didn't want to be part of Mullers 12 Angry Men freak show that we now have on Monday. The government have already appointed another administrator but I bet Muller is laughing his butt off this evening. On the 19th when he goes into court he will either win if he does his best Perry Mason and convinces the judges that this ridiculous soap opera can continue or if he loses, he can say that the new administrator was going on the biased opinions of the previous one and keep appealing and appealing well into the new year. Win/Win for Victor basically. He's had a good week all in all, what with Youngman paying in only enough money to settle the tax bill that he would have been personally liable for. Lofalk has won in a way too because now he won't be seen as the man who closed Saab if it all goes the way it should. The only losers are the workers, who still have not been paid (admittedly for doing nothing) despite promises that funding would be paid in today. You would have thought that if they are that cash rich they could have paid in wages at the same time they saved Victors backside. Oh well, one rule for one, one for another.

  • SCE to AUX The fix sounds like a bandaid. Kia's not going to address the defective shaft assemblies because it's hard and expensive - not cool.
  • Analoggrotto I am sick and tired of every little Hyundai Kia Genesis flaw being blown out of proportion. Why doesn't TTAC talk about the Tundra iForce Max problems, Toyota V35A engine problems or the Lexus 500H Hybrid problems? Here's why: education. Most of America is illiterate, as are the people who bash Hyundai Kia Genesis. Surveys conducted by credible sources have observed a high concentration of Hyundai Kia Genesis models at elite ivy league universities, you know those places where students earn degrees which earn more than $100K per year? Get with the program TTAC.
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  • Ted “the model is going to be almost 4 inches longer and 2 inches wider than its predecessor”Size matters. In this case there is 6” too much.
  • JMII Despite our past experience with Volvo my wife wants an EX30 badly. Small, upscale, minimalist EV hatch is basically her perfect vehicle.
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