Saab "Close" To $157m Bridge Loan, Situation "Dire"

Edward Niedermeyer
by Edward Niedermeyer

Bloomberg [via the Financial Post] reports that “one of the five biggest European banks” is “close” to loaning Saab $157m so that it may pay workers and suppliers, in order to move towards restarting production. According to, the deal is predicated on Saab securitizing the loan with shares of Saab Great Britain or other “alternative assets.” But apparently whatever the banks ask for, Saab will try to give, as Theodoor Gilissen Bankiers analyst Tom Muller explains

They need the money immediately. I hope they solve it this week, otherwise I think it’s over for Saab. It’s a very dire situation.

He’s not kidding…

Even in a “nuclear winter” scenario, Saab needs about $50m per month to keep the lights on. Add about $8m for supplier debts already logged with the kronofogden, and Saab might hold off bankruptcy for another week. To restart production, however, it needs to spend anywhere from $30m to $60m in order to pay off its entire estimated supplier debt. And get this: according to Bloomberg, Swedish Automobile’s market capitalization on the Dutch exchange is under €18m (about $26m at current exchange rates), but it’s still waiting on €245m (about $353m) from PangDa and Youngman in a deal that would value the company at over half a billion dollars. This looks quite a bit like a bridge to nowhere…

Edward Niedermeyer
Edward Niedermeyer

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  • 92golf 92golf on Aug 31, 2011

    I've never been in a tax bracket that would allow me to afford a Saab, especially a new one, but let me put in a plug for the new 9-5 sedan, and the probably never to be seen 9-5 SportCombi. I think they are really beautifully styled cars.

  • Its_Magic Its_Magic on Aug 31, 2011

    Saab Automobile cannot securitize Saab Great Brittain for a new bridge loan: As per June 2011, Saab has received pre-payment from customers amounting to €60.5 million. € 58 million of this amount relate to prepayments of cars from Chinese companies during the second quarter, whereof €45 million were received from Pang Da. These agreements stipulate that the car sales agreement can be terminated by the buyer with not less than six month notice. In the event of termination, the amount should be repaid within six months from termination at 7% interest. The prepayments from Pang Da are secured to Pang Da through a pledge on the shares of Saab Great Britain. In the cash flow statement the amount is included in “Change in current liabilities”. And have you guys seen the semi-annual report? In 6 months time a loss of 224 million euro. And in Q2 alone a loss of 150 milllion. So they burn at least 50 million euro (not dollar) when the factory is at a standstill.

  • SCE to AUX SCE to AUX on Aug 31, 2011

    Analyst Tom Muller says "I hope they solve it this week." So do I - by closing down this ridiculous drama with a liquidation.

    • Saab_lurker Saab_lurker on Aug 31, 2011

      Why the animus toward Saab? They're not spending your money (unlike GM, Chrysler).

  • Bertel Schmitt Bertel Schmitt on Aug 31, 2011

    Also of interest (emphasis mine):

    "On February 24, 2011, Swan announced that it had signed a memorandum of understanding to sell the assets of the Spyker Automotive business to the private UK holding CPP Global Holdings Limited. The sale has been suspended as of the date of this report. Swan is still in discussion with the potential buyer regarding the transaction, but might also consider other alternatives for the Spyker sports car business." CPP is owned by Vladimir Antonov, and the sale of the sportscar business to Andropov was widely seen as a backdoor to allow Andropov to invest into Saab, which he was barred from via the EIB loan agreement. It looks like hero Antonov has bowed out of that deal also. Further of interest: "Throughout the second quarter, Swan worked on Saab Automobile’s short-term financing through a number of activities, among which a convertible loan with Gemini Investment Fund Limited which was issued in May and the sale of 50.1 percent of the shares in Saab Automobile Property AB for a consideration of EUR 28 million which was finalized early July. In addition, a Chinese company placed an order to purchase 582 Saab vehicles with a value of EUR 13 million. Unfortunately, these agreements did not provide sufficient funding to finalise negotiations with suppliers and secure a sustainable restart of production; also, some of the funds committed by investors have not yet been paid. Swan and Saab Automobile continue discussions with several parties about obtaining additional funding for both the short, medium and long term in order to strengthen Saab Automobile’s financial position." It has always been my stated position that these transactions are as much a cure for Saab's ills as morphine for a terminally ill cancer patient. Anyone with a basic understanding of math could figure that out. It is interesting that even the touted sale of cars to Pang Da can be terminated by the buyer, and that the cash advance is securitized with Saab Great Britain shares. What we have here is a desperate Saab that takes whatever it has to the pawn broker. Whoever loans Saab money seems to be doing so on the assumption that it will go under, and that the value of the security exceeds the loan by a big margin. If a large bank indeed will give them a $157 m loan, they probably want it securitized for $300 m. From what assets is the big question. The mid-term report asks the same question: "Management is responsible under IFRS to evaluate, on a periodic basis, whether the value of fixed assets can be maintained in the balance sheet based on the business ability to generate cash from its future operations. Due to the recent events, including the significant production stoppage, Management recognizes that the business plan used as the base for the last evaluation is no longer valid and that the assets might be impaired. However, the current uncertainties described in this report make an adjustment of the asset value difficult to complete at this time." Finally, Saab's hopes dangle off a thin and frayed silk thread: "Management is of the opinion that the continuity of the Group can be secured based on the conditional EUR 245 million agreed investment by Pang Da and Youngman and based on the interest shown by investors to provide further short-term funding as is currently under negotiation. Management has accordingly prepared the financial statements on the assumption that the Group will be able to continue as a going concern. However, if adequate funding for the Group cannot be secured timely, going concern can likely not be maintained. Management is evaluating all available options in order to secure continuity of Saab Automobile." Meaning: If the Chinese bow out or cannot get the necessary government approvals in time (for a Chinese regulator, doing nothing is the best option for now,) those nasty "all available options" (euphemism for bankruptcy) will go in effect. Whoever loans money to Saab at this time does it with pledges of Saab's remaining assets. The final dismantling of Saab has begun a while ago. The sale and leaseback of the Saab property sounds like one of the better deals - for the buyer. The balance sheet looks nasty.