Saab slides into administration
BY RON HAMMERTON | 8th Sep 2011
Saab Australia managing director Stephen Nicholls told GoAuto today that under Swedish law, the decision will mean parts suppliers will be legally obliged to supply components to Saab’s factory in Trollhattan, as long as the money to pay for them is forthcoming.
“Whereas before they (suppliers) were holding off and saying we are not sure about this, the law now says that if we give them an order and some money they more or less have got to give us the parts,” he said.
“This means that we can now start to re-schedule the start of the factory, and get things moving again.
“We have always said that it would take about four weeks from the time it is re-scheduled to the time we get it going again, but that would be four weeks from the time we get the right decision from the administrator.”Mr Nicholls said that despite the developments at its home base overnight, it was business as usual for the Australian and New Zealand subsidiary of the Swedish company in the wake of the move by Swedish Automobile NV – Saab Automobile’s parent company – to seek court-protected reorganisation under an independent administrator for three months to sort out its parlous financial state.
But Mr Nicholls confirmed that the Australian launch of Saab’s first SUV, the new 9-4X, would now be delayed into the second half of next year after originally being expected in late 2011 or early 2012.
Saab 9-4X production at a General Motors plant in Mexico was shutdown by Saab’s former owner as Saab struggled to pay suppliers, including GM, which cast Saab adrift at the height of the financial crisis.
Re-starting that production by paying GM bills is expected to be a priority for Saab, because a large proportion of the 11,000 outstanding orders for its vehicles are for the medium-sized 9-4X SUV that is built alongside the Cadillac SRX.
“That would seem to be one of the no-brainers as the cars are produced in Mexico so they just ship them over the border and they get to the dealers pretty quickly,” Mr Nicholls said.
Announcing the decision to seek voluntary reorganisation at the District Court at Vanersbord, Swedish Automobile NV (SWAN) said the move would provide short-term stability for the company as it sought short-term funding to tide it over until the arrival of equity contributions from its new Chinese partners, dealer group Pang Da and car manufacturer Zhejiang Youngman.
SWAN has agreed to sell a combined 53.9 percent stake in Saab to Pang Da and a Youngman for €245 million euros ($325 million). The deal is awaiting approval from the Chinese authorities.
SWAN CEO and Saab chairman Victor Muller told employees in Trolhattan that the reorganisation process would present the company with a number of tough issues and decisions, but that Saab Automobile would emerge stronger.
“The potential for Saab Automobile as a viable, independent premium car manufacturer is there, as shown by the rejuvenation of our product portfolio, approximately 11,000 orders and the conditional long-term funding already in place through the binding agreements with Pang Da and Youngman that will give us access to the Chinese market,” he said.
“I would also like to express my deep gratitude to our employees, dealers, suppliers and all other stakeholders who have been so patient and understanding in the past trying months.
“I realise that we have severely tested their patience, but it has been heartening to see that in general, our employees, dealers, suppliers and other stakeholders have stood by us through this tough period.
“I look forward to continuing these relationships and collectively start building a brighter future for Saab Automobile.”Saab Automobile has proposed that the court appoint the same administrator who handled the company’s last plunge into reorganisation under GM in 2009, Swedish lawyer Guy Lofalk.
Mr Nicholls revealed that while creditors caught up in the previous Saab administration had been paid only 25 cents in the dollar, the company this time was proposing to pay 100 cents.
“The suppliers all get everything they are owed, which is a very different situation this time around,” Mr Nicholls said from his Melbourne office when he has been fielding calls from dealers and others anxious for news of the latest drama to beset the troubled company.
Mr Nicholls said Saab and its dealers had about 80 cars in stock in Australia, plus a few demos.
“We have enough to last us a little while longer, and we are not immediately in need of new cars, but obviously with the lead times and everything we are anxious to have the factory up and running again so we can get fresh stock in to have a go next year,” he said.
So far this year, Saab Australia has registered just 106 cars, including 30 of its new 9-5 flagship. The remainder are 9-3s, including 19 convertibles.
Saab’s main Trolhattan plant has been closed since April 6 due to cash flow problems, with Saab fighting a rearguard action against creditors – including parts suppliers and employees – that have threatened to push it into bankruptcy.
Saab has about 1000 suppliers awaiting a decision on production. In the first half of this year, Saab produced just 12,877 cars – a fraction of the 80,000 vehicle it had hoped to shift this year.
Saab has been wooing suitors to reinforce its financial situation, and thought it had a deal with small Chinese manufacturer Hawtai before that fell over when the would-be partner got cold feet.
The deal with Pang Da and Youngman was done in May, and despite some advances of cash, production has remained stalled due to failure to pay major suppliers.
Said Saab today: “Funding for Saab Automobile to exit reorganisation has been secured through binding agreements with Pang Da and Youngman as announced on July 4.
“The agreements are, however, subject to obtaining certain approvals.”Saab said the court-appointed administrator would apply for the Swedish state’s wage guarantee scheme to allow wage payments to all Saab Automobile employees to be made.
“August salaries are expected to be paid within a short time frame following the court approval,” it said.
