Category: News

Press Release from SWAN:

COURT OF APPEAL GRANTS RIGHT OF APPEAL TO SAAB AUTOMOBILE IN VOLUNTARY REORGANIZATION CASE

Zeewolde, The Netherlands, 19 September 2011 – Swedish Automobile N.V. (Swan) announces that Saab Automobile AB and its subsidiaries Saab Automobile Powertrain AB and Saab Automobile Tools AB (collectively Saab Automobile) received a right to appeal from the Court of Appeal in Gothenburg, Sweden today in their efforts to obtain approval for its proposal for voluntary reorganization.

Saab Automobile is pleased with the Court’s decision and will now await further developments. The Court of Appeal is expected to rule shortly on Saab Automobile’s appeal against the decision by the District Court in Vänersborg to reject Saab Automobile’s proposal for voluntary reorganization.

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And written prior to the press release…..

The court in Gothenburg has agreed to consider Saab’s appeal against the decision made last week in Vanersborg.

That’s the first “yes” we needed to hear.

Now, the case will be considered by a panel of judges, who will either rule in favour of Saab’s application for Reorganisation (the second ‘Yes’), or will rule against, which Saab could theoretically then appeal to the Supreme Court in Sweden.

This is a pretty big reorganisation application, said to be one of the biggest in Sweden and almost definitely the biggest taken to the appeal stage. Whilst the court has an obligation under the law to deal with the decision quickly, it’s possibly going to take a little time as they consider the precedent they’re setting. They do aim to have a decision prior to any scheduled bankruptcy hearing, the first of which is due on Sept 26. So bankruptcy filings at this point are little more than legal positioning and reason for a headline.

We still have confidence in them reaching a favourable reorganisation decision. Why? Because our business is still a good one with a lot going for it and that should be evident from the material supplied to the court.

Some news from inside Saab that I thought you’d be interested in seeing. The process so far and the processes to come.

Important bit of good news first…..

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Important milestone achieved in China process

Today, the PDRC, the provincial equivalent of the National Development and Reform
Commission (NDRC) approved the deal between Saab, Pang Da and Youngman. The decision is an important step in the process of getting NDRC’s approval.

There are three levels of this authority:

• DRC – the local authority, which has already given its approval
• PDRC – the provincial authority, which thus gave its approval today
• NDRC – the National Authority

We have passed two of the three levels, and will now proceed to the NDRC.

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A summary of the events of recent days

• Wednesday, September 7th Saab Automobile applied for voluntary reorganization in Vänersborg.
• The scope of the application included Saab Automobile AB, Saab Automobile Powertrain AB and Saab Automobile Tools AB. Other units, including Saab Parts and foreign subsidiaries (including Saab Great Britian and Saab Cars North America), were excluded.
• Thursday, September 8 it was announced in Vänersborg that the court rejected the Saab reorganisation application.
• The same day, Saab announced its intention to appeal this decision, because it disagreed with how the court interprets the law and its application.
• The appeal was submitted to the District Court on Monday 12 September.
• The new documentation, among other things, included a number of improvements implemented since the first reconstruction in 2009
• Letters from Pang Da and Youngman were included, thatclarify their commitment to Saab, and also to state that they have no reason to believe that the approval process with the Chinese authorities would not be completed or that there will be unexpected delays.
• As part of the reorganisation application, Saab also added information about a new contract that guarantees a so-called “bridge loan” of 70 million euros, roughly equivalent to 622 million SEK.
• Monday 12 September, two Unions filed for bankruptcy for Saab.
• According to information, it may take at least a few weeks for the court to consider this petition, which is a separate process from Saab’s reorganisation application, which is to be decided immediately.
• Both the leaders of the Unions have signaled that they contribute to the stay of bankruptcy if the Court of Appeal will take time to deal with reorganisation application.

What happens next?

• District Court will now send the appeal to the Court of Appeal. It is the district court’s duty to do so promptly. They have chosen to do so by postal mail, which means that the appeal will reach the Court of Appeal on Wednesday 14 September.
• The Court of Appeal first has to permit an appeal, that is, decide whether to reconsider the matter. It is the first time they have to consider a case of this kind and it is difficult to estimate how long it will take. It is estimated that it will take between one and a couple of days. After a decision to permit the appeal, it should be dealt with immediately in accordance with the law.
• It is in any case, likely that Saab’s appeal to the Court of Appeal will be dealt with more quickly than the unions’ petition to the district court.

I’ve written more about this subject, below.

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Trollhättan, Sweden: Swedish Automobile N.V. (Swan) announces that Saab Automobile AB and its subsidiaries Saab Automobile Powertrain AB and Saab Automobile Tools AB (collectively Saab Automobile) today lodged their appeal against the District Court’s decision last week to reject Saab Automobile’s proposal for voluntary reorganization. The appeal will be heard by the Court of Appeal in Gothenburg, Sweden.

Saab Automobile is of the opinion that by rejecting the voluntary reorganization proposal based on the reasons cited in the rejection statement, the District Court went considerably further in its consideration than what the legislator intended. Saab Automobile is of the opinion that the District Court has left out of consideration that the District Court’s assignment is to avoid pure abuse of the Swedish Company Reorganization Act approval of a reorganization request shall be based on the provision of a limited amount of documentation. Thus, Saab Automobile is of the opinion that in its ruling, the District Court has applied a much stricter standard of proof than is required under the Act.

The documentation for appeal contains, among other things, a number of improvements Saab Automobile has implemented since the last reorganization. This includes a patent application for Saab Automobile-developed extended range propulsion technology (EREV) that would considerably reduce fuel consumption in next-generation Saab vehicles, as well as the Saab Automobile-developed modular vehicle architecture.

In the meantime, Swan and Saab Automobile continue discussions with several parties about obtaining additional funding for the short term. Pang Da and Youngman continue working on obtaining approval from the National Development and Reform Commission (NDRC) for their equity investments worth EUR 245 million in Saab Automobile and have no reason to believe that the approval process will not be completed, nor that there will be unexpected delays. The approval process is expected to be finalized early November. Youngman and Pang Da intend after the initial equity contribution to contribute with additional capital.

The EUR 70 million commitment of Youngman and the technology license agreement between Saab Automobile and a special purpose vehicle, as communicated in the press release of this morning, are part of a bridge financing transaction. This bridge financing transaction and receipt of funds by Saab Automobile are still subject to finalization of definitive transaction documentation with the lender that will provide the bridge loan. Saab Automobile expects to finalize this process by September 26. Furthermore, international banks have shown interest in taking over Saab Automobile’s existing loans in order to add further liquidity to the company.

Zeewolde, The Netherlands, 8 September 2011

Swedish Automobile N.V. (Swan) announces that the District Court in Vänersborg, Sweden today rejected the proposal for voluntary reorganization by Saab Automobile AB and its subsidiaries Saab Automobile Powertrain AB and Saab Automobile Tools AB (collectively Saab Automobile). Saab Automobile is disappointed with the ruling and will appeal the District Court’s decision.

Swan will update the market tomorrow on further developments.

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UPDATE:

A press conference was just held here in Trollhattan where Chairman and CEO Victor Muller confirmed that Saab would be appealing the decision handed down today.

Victor Muller said that he was surprised and disappointed by the decision, that he thought Saab had satisfied what was believed to be the burden of proof to have a reorganisation application approved.

Obviously the court disagreed and now we will be ‘throwing the kitchen sink’ (i.e. absolutely everything) into the appeal documentation.

Video of the press conference below (h/t to SU for picking this up)

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UPDATE:

Further information, shared internally this afternoon but not sensitive, just confirmation of what’s been written above.

What happens next?

Saab has decided to appeal the district court’s decision.

Why?
The company believes that there is potential to continue successfully after a reorganization.

What happens now?

The company will analyse the district court’s decision with the help of legal counsel in preparation for an appeal.

Saab will supplement the original application with additional facts.

As the company now finds itself in a vulnerable situation, we have contacted the company’s stakeholders, including suppliers who have claims on Saab and the unions, in order to maintain a dialogue on the situation.

Tomorrow the company will give further information on the next steps in the process.