Our Daily Saab: SWAN Examines The Endgame Options

With Saab’s latest MOU with PangDa and Youngman expiring on Tuesday, the heat is on for parent company Swedish Automobile (SWAN) to hash out the many problems and disagreements between GM and the proposed Chinese buyers. And now that it’s fairly obvious that a deal won’t happen, as GM and the Chinese Government seem fairly well set against it, the question is “what next?” How do you plan an endgame that should have been initiated months, if not years ago? That’s the challenge being considered by the few remaining shareholders in SWAN, who are meeting in Holland to pick through the none-too appealing options.

According to a press release posted at Saabsunited, there are only a few options:

If Swan is not able to complete a sale of the Saab Auto Group or secure further financing for the Saab Auto Group, management will likely not be able to safeguard the continuity of the Saab Auto Group, which will have negative financial implications for Swan and its stakeholders and may result in the bankruptcy of the Saab Group.

If Swan is not able to complete a sale of the Spyker business, Swan may continue the Spyker business, provided that the necessary funding for that business can be obtained.

If Swan were to sell the Saab Group but continues the activities of the Spyker business, as it did before it acquired the Saab Auto Group at the beginning of 2010, it will focus exclusively on the Spyker business.



If both businesses are sold, Swan will consider all of its options (including a voluntary liquidation of Swan).

With Saab Auto Group almost certain to be forced into bankruptcy, the real question has to do with what happens to Spyker. North Street CApital has allegedly agreed to buy the sportscar brand for some $32m, or about the amount it loses most years… and North Street itself has some credibility issues. In a best-case scenario, in which the Chinese are able to buy Saab and North Street pays full price for Spyker, SWAN’s debt will still exceed the proceeds of those sales by some four million euros. With no revenue from the sales of Saab or Spyker, SWAN has a €136m in debt will come crashing down around it. Since Saab’s bankruptcy is a foregone conclusion and Spyker’s sale won’t generate close to enough to ward off SWAN’s creditors (and it’s not a money-making asset anyway), there’s very little chance that Victor Muller’s company will just go back to its Spyker business.

In short, this train is headed towards liquidation… the only question now is whether Spyker survives. It’s unlikely that North Street can really operate the business, and I’m doubtful that a deal will even be done (especially at the quoted price). My guess is that Saab’s bankruptcy and SWAN’s crushing debt will spell the end of Spyker. How’s that for pathos: you start with one car company, try to add another, and end up losing both. Perhaps if Muller had cut his losses earlier, Spyker might have been saved… but having dragged out this process and leveraged evreything to keep the Saab dream alive, Muller is out of options. And judgement day comes on Tuesday…