Saab beats the hangman, again
BY DAVID HASSALL | 31st Oct 2011
The struggling Swedish car-maker announced the deal involves payment of €100 million ($A132.5m) for total ownership of the company, with 60 per cent going to Zhejiang Youngman Lotus Automobile Co and 40 per cent to Pang Da Automobile Trade Co.
Although an earlier deal involved a figure of €245 million, the chief executive of parent company Swedish Automobile, Victor Muller, said in a conference call to journalists that the total level of investment would eventually double that figure.
Documents submitted to a Swedish court this week show the two Chinese companies plan to provide a €50 million bridge loan and €610 million in long-term financing from 2012.
However, after a meeting with creditors, the court ruled that the reconstruction could only continue if Saab eventually cut around 15 per cent of its 3400-strong workforce.
The Swedish company also now requires the go-ahead from the central government in Beijing, which torpedoed a Saab buyout by another Chinese company, Hawtai Motor Group, in May.
Nevertheless, Mr Muller, who has kept Saab afloat for months with no production or sales, is confident that his rescue operation – and the likelihood of a hefty personal loss – has finally come to fruition.
“After the better part of seven months of agony for the company, we have come to a point where we can proudly say that we made it,” he said.
“I have had no life in the past two years... My job was to save the company. I think I achieved it.
“We can be comfortable that the business plan that the company had made will now be executed and that the funding will be provided.”Mr Muller, 52, is a Dutch car enthusiast who co-founded Spyker in 1999 and now the biggest shareholder in Swedish Automobile, which was formed after Spyker bought Saab from GM in early 2010 for €54m.
He said Swedish Automobile would lose about €70m from its Saab investment, having subsequently pumped €120m into the cash-strapped car-maker.
Saab was forced to cease production at its Trollhattan plant in April when suppliers stopped delivery of components due to non-payment of debts, but had to continue paying employees to avoid bankruptcy.
GM remained one of Saab’s biggest component suppliers.
Friday’s announcement came just in time to prevent creditors from moving to bankrupt the company, which has been under court protection since August.
The court had been due to rule on a request by administrator Guy Lofalk to terminate the creditor protection scheme on Friday.
The MOU is valid until November 15, provided Saab Automobile stays under court-protected voluntary reorganisation.
Completion of the sale would complete a Chinese takeover of the Swedish car industry following the purchase last year of Volvo by Geely.
Although the Spyker luxury sports car business is not part of the Saab deal, Mr Muller has already agreed to sell the Dutch brand to US private equity company North Street Capital in a deal worth about €32m.
Mr Muller said he has spoken only briefly to GM about the proposed Chinese sale, and acknowledged they will be the most difficult party to convince, but is confident the US giant, along with the EIB and creditors, will approve the deal tonight.
“If we play our cards right, I think that they will be convinced that this is of benefit to all parties, including themselves,” he said.
