Spyker And Saab In Deep Trouble

Bertel Schmitt
by Bertel Schmitt

When Spyker bought Saab from GM, they bit off too much than they can chew. Spyker is upside down, under water, or whatever you call it when you have negative equity. They just announced that their debt exceeds their capital. And it looks like they have been dipped by GM: “The negative equity is due to the preferred shares that were issued to GM.”

Preferreds are both equity and debt instruments. Spyker keeps its books according to the Euro-centric IFRS (International Financial Reporting Standards), not according to the U.S.-centric GAAP. Under INFRS, preferreds must be kept on the books as debt if redemption is beyond the control of the company or if dividend must be paid on a periodic basis. You need money to pay those dividends.

Spyker has never made a cent in profits. In 2009, they had €19.24m losses on sales of €6.6m. A company like that can’t afford Saab. Oh, well. GM was used to selling cars to people who can’t afford them. Why not whole car companies?

According to Automobilwoche [sub] Spyker wants to wait with further comments until they presented their half year report on August 27. As a listed company, Spyker has 5 days to declare itself after the capital is exhausted. Automobilwoche: “Whether Spyker has to declare bankruptcy or whether they can find new capital is unsure.”

Collateral damage: BMW. BMW wanted to deliver engines for the Saab crossover 9-4X and possibly for the Saab 9-3. That deal appears to be on ice for the moment.

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6 of 28 comments
  • Dave M. Dave M. on Aug 26, 2010
    Awww well no surprise here… everything the Americans touch ends in failure sooner or later. Common sense tells us that if Ford hadn't stepped in and grabbed Jaguar 20 years ago, there's no way they would have survived as an independent until now. As well, with the hugely increased relaibility Ford brought to them. Conversely, Daimler did nothing but ass rape Chrysler. Perhaps financially they served as a short term white knight, but they left little but a hollow corpse in their wake. Finally, I imagine someday Honda will have to shack up with someone bigger. I bet it'll be BMW.

  • Mpresley Mpresley on Aug 26, 2010

    SAAB is the answer to a question no one is asking. Their last best hope was for them to make a play for some Chinese money, but now it's doubtful that even the Chicoms would care. Besides, ever since Ingmar Bergman died, and now that leftist college professors have a Prius to drive (or maybe even a Volt although I doubt that even Marxist English professors are that stupid), what is the point?

    • See 1 previous
    • Mpresley Mpresley on Aug 27, 2010

      Dear Mr Perisoft: Saab will never make it big in the Asian East since real Communists don't like torque steer; they mostly turn leftward. And I intentionally refrained from mentioning Chairman Maobama. After all, he's a GM man (there I go...).

  • Paul W Paul W on Aug 27, 2010

    Remember that Spyker has been granted big loans from the EIB that the company hasn't used yet, so there is no immediate threat of running out of cash.

  • AnthonyG AnthonyG on Aug 27, 2010

    Sounds like the MG Rover situation all over again, although things seem to be speeded up this time, 6 months rather than 5 years to go bankrupt. BMW will not buy Saab - they do not need it and are terrible at managing other brands anyway. The shareholders would never allow it either. Mini they effectively created - it was orginally one model, not a company.