SAAB WATCH 2011 : GM questions China deal

11/07/11 - The developing deal between Swedish Automobile and Chinese investors, a deal that would resurrect Saab from its current financial coffin, may be dead on arrival. According to an article on Reuters.com this morning, GM is considering killing the deal that would send Saab over to Chinese automotive companies Youngman and Pang Da. The deal, worth 100 euro million, has until November 15th to be accepted by a slew of invested parties. One of these is General Motors, who as the former owner of Saab, still holds some preferred shares in the Swedish company. The company has been reported as being indifferent to the state of Saab, but rather concerned with their own role in this changing of chairmen.

It was reported late Friday that GM would deny the option for Chinese investors to take control of Saab if it meant that it would affect their interest in China and beyond. The reason being, is that GM still provides several components and services to Saab Automobile and if the deal went through, the American auto manufacturer could be replaced by a Chinese counterpart. That would hurt GM where it matters to them most; their wallets. Anticipating this, GM has made it clear Friday, they would consider turning down the sale.

This morning, Kevin Wale, president and managing director for GM's China operation, reiterated GM's statement to Reuters in a phone interview. He was quoted as saying, "It doesn't make sense for us to support any change that might adversely affect us. We use global architectures and those global architectures are used in a number of products we make at SGM." SGM or Shanghai GM is GM's Chinese branch that the company has worked furiously to build up over the past few years.

While it makes fiscal sense to be worried about the deal, rejecting the sale could very much end Saab all together. In that case, GM would lose that aspect of their production either way. Still, this could be a tactic implemented by GM to strike a side deal with Pang Da and Youngman Lotus. By voicing their concerns publicly, GM may be greasing their wheels in a way that could get a contract in place between the Chinese investors and GM to continue their service to the Saab name.

This move is not that different than what Saab's current owner, Swedish Automobile had done two weeks prior to the deal. Feeling vulnerable by the Chinese insistence to buy out control of Saab, Swedish Automobile announced they would end the agreement between them and the Chinese. As we all know, that lasted for about three days, until Saab announced the deal would send Saab to China in exchanged for a fair price on the bankrupt manufacturer.

For now, GM is firm in their position. Whether this will stay as is, will be revealed no later than the 15th of the month, when the deadline to make the sale is set to expire. One thing is for sure, however. Saab's future is still up in the air.

Tyler Baker; OSM Writer

( Source - Reuters.com )

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SAAB WATCH 2011 : The Journey East

11/01/11 – Welcome to another update of One Stop Motors continued coverage on Saab Automotive’s developing story.  Ladies and gentlemen, it’s time for SAAB WATCH2011!  The East Coast is currently being blanketed in a snowy blizzard, but it appears as though on the Eastern Hemisphere, it’s raining money.  Reported today on Bloomberg.com, the Chinese investors who have arranged a deal to purchase the Saab brand from owner, Swedish Automobile NA, have gotten the blessing from Swedish courts to keep Saab protected from creditors.  This will allow them to restructure, redistribute and realign as they start to resemble an actual company for the first time in a long time.  Of course, this has everything to do with Chinese companies, Pang Da Automobile Trade Co. and Zhejiang Youngman Lotus Automobile, who are set to invest $844 million (610 million euros) into the Swedish car manufacturer over the next several years.   This pledge, according to Bloomberg.com, has satisfied courts and coaxed them into extending the companies protection.

In an immediate move, Pang Da and Youngman will be providing a bridge loan of 50 million euros to keep the company afloat while it reorganizes.  Unfortunately, this is only the good news.  The bad news comes to 500 to-be-determined Saab employees who will lose their jobs over budget cuts.  Saab’s current Chairman, Victor Muller, was reported saying, “But we have a lot of work ahead to even get the investment approved, and Saab has suffered tremendous damage to its brand and supplier base that must be overcome.”  His optimistic words at least somewhat implies Muller may not be in that wave of 500 who lose their jobs.  Still one thing is certain, nothing is really certain.  Saab is stuck waiting on the investment from the Chinese to be approved by the appropriate channels.  Until then, there is still a looming potential for a breakdown in business.

The Chinese have also outlined a plan that would use their $844 million to make Saab profitable by 2014.  According to Bloomberg.com, Saab’s new plan hinges on their expectation to sell 35,000 to 55,000 cars next year.  By 2014, they expect to sell 130,000 to 150,000 cars.  This may be a gross overestimate seeing as Saab hasn’t sold over the 100,000 mark since 2007 (then owned by GM).  Last year they only sold 32,048 and the year before that, 20,905.  2011 wasn’t that great of a year either, with the assembly line shut downs and the bankruptcy spectacular.  Having damaged their relationship with everyone but the Chinese (which they almost ruined last week), it will be interesting to see how Saab fares in the next year or two.  Until then, they are alive; leaner and meaner, but alive.

Tyler Baker; OSM Writer

( Source : Bloomberg.com )

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SAAB WATCH 2011...The Saga Continues!

10/28/11 – In a stunning turn in the SAAB WATCH 2011 saga, Saab Automotive announced early Friday that the company would be sold for $142 million to Chinese industry investors Pang Da Automotive Trade Co. and Zhejiang Youngman Lotus Automotive Co. Ironically, these are the same parties that Swedish Automotives rejected handing over the Saab reigns to late last week. As reported in The Wall Street Journal, this week, they have not only agreed to give up controlling interest in the troubled 60-year company, but to sell off the entire brand in a 60/40 split (60% to Youngman and 40% to Pang Da). It is still unclear as to how much current Saab Chairman, Victor Muller, will be involved in the future of the Swedish automotive manufacturer, but one has to think any high ranking suit in the Saab infrastructural will be replaced by a Chinese counterpart.

Saab was on the final day before they could possibly lose their creditor protection (equivalent to declaring bankruptcy) and had already pulled the plug on their restructuring process due to lack of funds. It seemed bleak that they would bounce back after refusing the original July deal with Chinese investors for a reported $245 million in loans and funds in exchange for 54% stake in the company. The Chinese held out, weighing their options, something Saab ran out of as time elapsed. When Saab realized the Chinese funding was being re-evaluated and the Chinese wanted to take complete control, the board publicly killed the deal between them. They were afraid the Saab name would be lost if sold overseas. Now it appears that Saab has been so backed up into the corner that they had no other choice but to sell. The two Chinese companies will now invest a higher price than the $245 million the original deal was for according to Mr. Muller, but the $142 million will buy out the currently issued stock held by Saab investors.

According to WSJ, Swedish Automobile (then called Spyker Cars NV) purchased Saab from GM in February 2010 for a price tag of $74 million. It claimed Saab would turn a profit by 2012, but instead, in 2012 Saab will have it’s third owner in three years. While the deal is still subject to approval by a slew of parties including GM and Chinese authorities, this is still the most comforting news for Saab in seven months filled with litigation, speculation and legal actions. It also stands out for the Chinese Automotive industry, which has been aggressively shopping for Western manufacturers to expand their international reach. Unfortunately, they have had little success. Besides Volvo, which was bought by Zhejiang Geely Holding Group Co. from Ford Motors last year, Saab will only be the second purchase of a foreign manufacturer by a Chinese based auto maker.

A memorendum of understanding has been signed between the two Chinese investors and Swedish Automobile and will be valid until November 15 of this year. This, however, will need to go through Saab’s laundry list of creditors who must approve the purposed reorganization process. They meet on Monday of next week to discuss the takeover. Until then, Saab is still in the woods, but a the clearing seems to be just ahead. Check in again with One Stop Motors as we continue our coverage of SAAB WATCH 2011 and feel free to visit us at www.OneStopMotors.com.

Tyler Baker; OSM Writer

( Source : The Wall Street Journal )

SAAB WATCH 2011!

If you’ve been following along with One Stop Motors as we’ve covered breaking news regarding the ongoing state of emergency at Saab Automotives (if so, respect), then you know Saab is standing at the edge of the financial plank, looking down. As the situation progresses, it appears as if the 70 year old company can’t catch a break. Still, the boardroom shuffle and court mandated drama has made Saab’s monitory misfortunes an entertaining spectacle for the world to watch. In honor of Saab’s constant grind between life or death and our unhealthy adore for a good news blizzard we at One Stop Motors are proud to present SAAB WATCH 2011!

10/27/11 – Today, Reuters.com reported on the current position Saab has situated itself into. While that may be a personal opinion, it seems hard to refute that much of Saab’s recent hardships were brought on by themselves. As Reuters reported, the Saab administrator in-charge of it’s bankruptcy prevention asked the Swedish courts, who have been protecting Saab from it’s creditors for the past month, to end the administration process of their corporate restructuring. The reason given was that Saab had insufficient funds to keep the restructuring process running.

While on the outside it may look as if Saab simply saw the wrong side of a fate, those who are familiar with the events of last week, will know it is the opposite. Late Sunday, Saab killed it’s deal with Chinese investors Zhejiang Youngman Lotus Automobile Co. and Pang Da Automobile Trade Co. that had been in place since June. What would have gotten Saab $340 million in loans and funding, was dropped by Swedish Automobile (the parent company of Saab) based on their unwillingness to hand over controlling interest of the doomed car manufacturer. Instead, they’ve elected to look for investments from other parties. With one day left before Swedish courts can put an end to Saab’s bankruptcy protection, it seems unlikely that the courts will side in the company’s favor (though they said they will hear the company out until they make a decision). Saab has already missed the deadline to react to the administrator’s request. It’s this kind of carelessness and negligence that leads us to assume the courts will release an injured Saab out into the wild for it’s creditor preditors to pounce.

The question become, does Saab deserve to be rescued? To avoid potentially losing the Saab name all together, they cut ties to the fastest and potentially only significant financial pipeline they had. Yes, they have issued $10 million worth of stock to North Street Capital LP and accepted an additional $60 million in loans from the U.S. based hedge fund managment firm last week. This must have boost their confidence quite a bit, as a few days later, they denied the Chinese investment deal. Suddenly, however, they’ve had to scramble to find some breathing room before their protection gives out. Even though the Chinese investors continue to claim that the deal between them and Saab is still valid and they plan to come through with the capital, it is uncertain how involved Saab is willing to be with this. Trading in immediate debt relief to save a name brand seems foolhardy on Saab’s part. Especially when you consider that the move alone could cripple their recovery entirely. What is really worst then? Losing a name or losing everything (including over 3,000 jobs)? To Saab, at least, the name is more important. Perhaps they have a few cards still left face down.

We will continue our coverage of SAAB WATCH 2011 as the news breaks. Check in with us regularly to learn the latest developments in the Saab story. As always, we encourage you to visit us at OneStopMotors.com; you’re one stop for buying and selling used vehicles online. You can also follow us on Twitter and Facebook.

Tyler Baker; OSM Writer

( Source : Reuters.com )

Saab’s lingering landslide leaves company running idle.

If you’ve been keeping up with the developing news of Swedish car manufacturer, Saab Automotive, then you’re already aware that Saab is sitting on the edge of non-existence.  The company’s production line has been inactive since June and they were almost liquidated in July for failure to pay owed wages (which they scrambled to pay).  As they hold out for some glimmer of a monetary miracle, the question must be asked; does Saab stand a chance to survive?

Autoweek.com reported on the critical condition of Saab earlier this week.  According to the automotive news source, Saab is likely to be declared bankrupt by Swedish courts as soon as today.  The company has already won court protection from creditors recently, allowing them to remain alive until funds are found.  Where would these funds come from?  Saab has apparently been waiting for investment capital from two Chinese companies.  Pang Da, an import car distributor in China is in line to provide Saab with $239 million to dig the car company out of debt.  On top of that, another Chinese car based enterprise in Youngman Automotive Group is said to be supplying an additional $95.7 million in a deal Saab had made last month with the two organizations.  For a time, it seemed like Saab might grind it out and rebound from their financial woos, however now it seems more likely that they will die out like so many companies in the market today.

The reason Saab’s future is loosing light is due to reports in Europe that the Chinese government will deny Saab’s deal with Youngman and Pang Da.  As Autoweek.com explains, Saab is not giving up any intellectual property under the agreement and this appears to be a deal-breaker in the eyes of the Chinese government.  Whether this is speculation or fact, it might not matter all that much.  Simply put, Saab has been under a microscope in the last several months and their plan to resurrect themselves has been questioned by the Swedish government and the rest of the world.  They’ve already begun selling off assets as a way to cover as much overhead as they can until the new money deal kicks in.  

As optimistic as they may front to be, a business desperately scrapping up money and hindering on both courts and other companies for aid looks like a lost cause already.  Even if they do manage to get the funds, they’re production is only one-third of what it was in 2008.  Saab vehicles are simply are not selling around the world and with all the negative publicity they’ve been subjected to in the last two years, it’s hard to see an upside in their sales.  Still, businesses have survived worst.  Until a major break in their tear-some tale is had, Saab will continue to hang in economic purgatory.  For their three thousand plus employees, however, we can only hold our hopes for the best outcome.

Tyler Baker; OSM Writer.

 (Source : Autoweek.com )