Watching the Saab reorganisation reports

Tis the season to be jolly nervous…..

The Examiner is posing some Dear Santa questions from various stakeholders in the car industry:

Saab Owners: A glimmer of hope for the future of their beloved, quirky sport sedan.

Actually, I think most people are wishing for a future hatchback, but that aside….

Yes, people are indeed looking for hope for Saab Automobile. This weekend’s going to be a crucial one as we have a very important court hearing on Monday afternoon and some key events leading up to that hearing will go a long way in determining the short term future of the company.

The Examiner’s info is a little bit outdated (not uncommon) but there is plenty of hope for this company if we can overcome a few short term, not-insignificant obstacles.

Naturally, I keep a pretty close eye on what’s being reported in the motoring press about Saab’s current fight to survive. It will come as no surprise that many commentators wrote Saab off a long time ago.

e.g. The Truth About Cars:

all these delays have only made it more likely that Saab will die on the week before Christmas.

Those are probably the kindest words uttered about Saab by TTAC in the last six months.

The news services generally report events as they happen, with a little bit of historical context thrown in. They rarely make predictions about what will happen next, most likely because they’ve learned from prior experience that with Saab, especially in 2011, you can’t tell what’s going to happen next 🙂

Commentators, on the other hand, are paid to provide commentary. They interpret and they use their varied levels of experience to predict what they think is going to happen in the future. That’s reasonably easy when it comes to most companies, but not with Saab, and many commentators had Saab dead and buried well before December 2011.

They’re generally a proud bunch and don’t like to change their predictions – egos are just as prominent amongst commentators as they are amongst auto executives and a reputation for reading the wind correctly is everything – but it’s good to see that some writers are at least recognising the incredibly gutsy fight being put up by the Saab executive here in Sweden.

Paul Eisenstein:

It’s proving a lot more risky than most folks might have anticipated to bet against the struggling Swedish automaker Saab.Just ask administrator Guy Lofalk.

Barely a week ago, he had recommended that the courts end Saab’s voluntary reorganization, which would have meant the collapse of the company, which has been struggling to find investors – or a buyer – since last spring. Instead, Lofalk has been fired and replaced with what appears to be a more willing administrator while Saab itself will have some more time to pull together a deal.

By the way, some reports (like this one at Reuters) might leave readers with the impression that Guy Lofalk won’t be allowed to resign his position as administrator. My understanding is that Lofalk has to stay on until Monday – the court hearing, again – which will give our creditors the opportunity to approve the change of administrator. So he will be able to leave the position, just not quite at the time of his choosing.

But back to slightly confounded journalists 🙂

From Just Auto:

Every week for months now, I expect to be writing a small obituary for Saab, gone to join the likes of Pontiac, Saturn, Oldsmobile, Rover, Austin et al in brand name heaven and, every week, another rabbit gets pulled out of the hat.

That’s the quote that started this whole post, actually.

The reasons that people write us off are understandable given that they’re not privy to all that’s happening at Saab. We’re a small fish in a big ocean, we’re in financial trouble, etc etc. We have some key stakeholders that have made decisions about our future for us and we’ve had to work around those decisions, which has made the process even longer.

But the key thing to remember here is that we DO have a lot of things going for us as a company. Perhaps the key thing going for us right now is the significant interest we have some from some well-resourced investors and the support we have from our closest stakeholders.

They key question is whether or not a structure can be found and put into motion quickly enough to reassure the decision makers. It’s quite literally a race against time. A valid solution is in place and should be presented on Monday. It’s a matter of whether or not we’ll be allowed the time to execute it.

From a media-watcher’s point of view, it’s just good to see some recognising that we’re working our butts off to achieve a good result here. And that we’re not doing it without reason.

Have a good weekend. No prizes for guessing what’s on our Christmas wish list this year – a speedy positive outcome for our employees and a bright future for the Saab brand.

News: Payment transferred

News from the front office in Trollhattan:

Saab confirms that the first payment of the funding, which was promised by Youngman, now has been transferred to Saab’s account. The efforts to secure the remaining funding, needed to pay salaries and continue the voluntary reorganization, continue and the work is moving progressively forward.

Press Release: SWEDISH AUTOMOBILE INFORMED BY ADMINISTRATOR OF APPLICATION TO TERMINATE VOLUNTARY REORGANIZATION

Zeewolde, The Netherlands, 7 December 2011 – Swedish Automobile N.V. (Swan) announces it has been informed that the administrator of the reorganization, Mr.< Guy Lofalk, will apply for termination of the voluntary reorganization of Saab Automobile AB (Saab Automobile) and two subsidiaries with the District Court in Vänersborg, Sweden. Saab Automobile and its creditors have approximately five to six days to submit their view to the District Court before the Court takes a final decision about termination of the reorganization. The management of Saab Automobile will consider future steps and continues the current discussions with Youngman about the necessary funding to pay the wages and be able to continue the voluntary reorganization.

Saab delay submission to creditors in order to continue negotiations

Re-posted

As the day in question is tomorrow and there are still a few headlines going around about this, I thought it wise to bring it back to the top of the page.

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Despite the sound of the headline, this is not a press release.

The purpose of this posting is two-fold: to talk of the delay in the submission to creditors that was planned for November 22, and to clarify what was going to happen on that date.

As has been mentioned in the media already, Saab/Swan and Guy Lofalk have taken a decision to delay submitting their composition proposal to creditors. According to the time plan mentioned at the Creditors Meeting on October 31, this proposal was due to be submitted on November 22. As with much of what’s happening as part of this process, however, that date on that October plan was a preliminary date, and subject to change depending on the prevailing circumstances.

Right now, the prevailing circumstances include ongoing negotiations with our partners and stakeholders. We submitted a purchase proposal to General Motors, which they rejected. We are now negotiating a proposal with a view to getting an outcome that will be acceptable to all parties and it was held that the November 22 submission should be delayed in order to facilitate those ongoing negotiations.

There’s been a fair bit of anxiety over the November 22 date and what it might entail for Saab. It has been described in some reports as another Creditors Meeting, which implies a decision point in the process. This is not actually the case.

What was actually due to happen was the submission of what is referred to as a composition proposal. This is a proposal sent to creditors by Saab for their consideration, one that specifies how Saab intends to pay back outstanding debts, as well as a proposal on future payment and delivery terms. Our creditors and suppliers have been notified about this delay by Saab’s purchasing department as part of our ongoing conversation with stakeholders.

There is no replacement date for November 22 at this stage, but obviously everyone concerned would like to get this process moving as soon as possible. We also have to get it right, however, and the first crucial step in getting it done right is to get a purchase proposal together that all parties can approve, which is what we’re working on right now.

Saab Preliminary Reorganisation Plan

The following plan was submitted to the Vanersborg District Court today as the background material for presentation to the Creditors Meeting.

It makes for some very interesting reading in all respects, both as a brief historical document (as in…. how did Saab get here?) and as a guide for the future. If you’re into following what Saab do, or plan to do, then this is your required reading for the week.

The sections:

    1. Introduction and Background
    2. Development since the last reorganization and Consequences thereof
    3. The Way Forward
    3.1. Immediate Action Highlights
    3.2. New Owners and “Extended Saab”
    3.3. The Restart
    3.4. Long-Term Strategy and Viability
    3.4.1. Positioning & Portfolio
    3.4.2. Operations
    3.4.3. Long Term Volume Forecast
    4. Funding
    5. Preliminary Reorganization Plan
    6. Timetable and Next Steps

You can download your own copy of the document in English, here (pdf) or in Swedish here (pdf). The press release summarising the highlights of this document is available here.

I have reproduced the document in full, below.

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1. Introduction and Background

On February 20, 2009, while still under ownership of General Motors, SAAB was granted a first order for reorganization. This reorganisation was conducted until 20 August 2009 when the targets were considered fulfilled by the actions taken.

While still under reorganisation, former owner General Motors continued negotiations with potential buyers. An initially negotiated deal with Koenigsegg Group was, however, cancelled on November 24, 2009.

Continue reading Saab Preliminary Reorganisation Plan

Saab's reorganisation continues

UPDATE: The following press release has just been issued.

District Court APPROVE REORGANIZATION Voluntary Continuation

Zeewolde, The Netherlands, 31 October 2011 – Swedish Automobile NV (Swan) announces that the District Court in Vanersborg approve the continuation of the voluntary reorganization of Saab Automobile AB and its subsidiaries Saab Automobile Powertrain AB and Saab Automobile Tools AB following the creditors meeting of this morning.

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I don’t have any further details on this, but I’ve just noted a tweet from one of my colleagues at Saab:

Good news. We continue on with our approvals and reorganisation.

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You can read a detailed copy of the Preliminary Reorganisation Plan at this link (pdf).

A summary is available via pres release at this link.

Press Release: Information On Restructuring Plan for Saab Automobile

Trollhättan, Sweden: Swedish Automobile N.V. (Swan) announces that Saab Automobile AB and its subsidiaries Saab Automobile Powertrain AB and Saab Automobile Tools AB (together Saab Automobile) today present their preliminary reorganization plan to their creditors during a creditors’ meeting in Vänersborg, Sweden.

The preliminary reorganization plan, which was developed by Saab Automobile management and supported by the current and foreseen owners of Saab Automobile as well as its administrator of the reorganization, contains the following highlights:

  • Pending the approval from all relevant parties, short- and long-term funding for Saab Automobile is assured: Youngman and Pang Da have expressed their commitment to provide EUR 50 million, to fund Saab Automobile while in reorganization. In addition, the Chinese investors will provide a minimum of EUR 600 million in funding to restart production, to settle the company’s clear and due debts and to fund operations for the 2012-2013 medium-term timeframe. To provide funding for the revised business plan and provide long-term financial stability the new Chinese owners have also budgeted funding for the planned expansion of Saab Automobile’s portfolio and additional operations to be set up in China. Saab Automobile has not received the funds from Pang Da and Youngman that have been committed for today.
  • New strategy and structure to combine the strength of Pang Da, Youngman and Saab Automobile, with Saab Automobile’s brand equity and heritage, product portfolio and capabilities being the key elements of that partnership combined with the distribution capabilities of Pang Da in China and the manufacturing expertise of Youngman.
  • Key actions during reorganization: establish new ownership structure with Pang Da and Youngman as strategic partners; reach agreement with creditors on repayment of outstanding debt to restore Saab Automobile’s supply chain; reduce structural costs by SEK1 billion, among others through reducing headcount by 500 employees; and generally restore confidence and trust with all key stakeholders
  • Restart plan highlights include: seamless production restart supported by existing order bank; accelerate access to China as major growth market; new distributorship agreements in other emerging markets like Russia, new products for traditional key markets (65% of volume) and China which include the 9-5 SportCombi and the 9-4X.
  • Confirmation of the long-term strategy of repositioning Saab as a distinctive, near premium brand supported by a renewed and broadened product portfolio, a more flexible cost structure with global production footprint, cross-carline modular technology architecture generating synergies, provision of external engineering services and expanded operations to take advantage of growth opportunities available in China and provided by strong Chinese owners.
  • Sales targets for 2012 of 35-55,000 cars and 2013 of 75-85,000 cars based on realistic ramp up in line with sales development since last restart.
  • Long term volume outlook of 185-205,000 cars of Saab Automobile based on three main growth drivers: 1) broadened product portfolio in fast growing market segments; 2) capitalizing on access to Chinese market, and; 3) strong profitability focus.
  • 2012 and 2013 seen as financial transition years, profitability expected no later than 2014. Long term margins and profitability in line with other near premium car manufacturers.

A complete version of the preliminary reorganization plan is available for download via www.swedish-automobile.nl (pdf) and http://media.saab.com.

Regarding the Creditors Meeting

Earlier today I wrote an article here at Inside Saab that may have left the impression that a vote would be taken at the creditors meeting underway today at the district court in Vanersborg.

That impression would be incorrect.

I’ve received some information internally that spells out the following, which should help those interested in the process Saab is currently involved in:

The main purpose of the creditors meeting is to give the creditors influence over the proceedings, i.e. if the proceedings shall be allowed to continue and also the conduct of the reorganisation. The judge leads the meeting. Normally the judge starts by explaining the purpose of the meeting and then leads the meeting. The judge then leaves the word to the administrator.

During the meeting a preliminary reorganisation plan will be presented and the creditors will be allowed to ask questions and express their view of the reorganisation. The meeting is only for arguments and no voting will take place.

During the meeting there will also be a possibility to appoint a creditors’ committee. The reason is often that the creditors want more insight into the reorganisation work.

After the proceedings the Court will rule for a cease or a continuation of the reorganisation process. This can take up to two weeks.

So now we’re all better informed…..

Press Release: ONGOING DISCUSSIONS WITH PANG DA AND YOUNGMAN

Zeewolde, The Netherlands, 21 October 2011 – Swedish Automobile N.V. (Swan) confirms that a new offer, constituting a direct purchase of the shares of Saab Automobile AB and Saab Great Britain Ltd, was made by Pang Da and Youngman. The parties made the offer during discussions with Swan, referring to changed circumstances since July 2011 when the subscription agreement was signed. Swan declined this offer. Swan has requested confirmation from Pang Da and Youngman that they are able and willing to consummate the agreements that are signed. That confirmation has not been received to date. Further discussions are ongoing.

Yesterday the administrator filed an application to terminate the voluntary reorganization process with the District Court in Vänersborg, Sweden. The regular procedure prescribes a hearing of the arguments of both the administrator and Saab Automobile. Saab Automobile has until 27 October 2011 to reply. The court has informed Saab Automobile that it shall decide on this case on 28 October 2011.

The current developments do not influence the validity of the offer of North Street Capital LP as communicated yesterday.

In view of all developments Swan has decided to publish its Q3, 2011 results on 30 November 2011 instead of 28 October 2011.

Coverage from the last 24 hours of Saab news

A few pieces from the web that I think people should check out as they try to digest the news from today……..

Firstly, there’s an interview with Saab CEO Victor Muller on Radio P4 West, from Sweden. It’s in English.

Lyssna: Saabs vd, Victor Muller, om företagets situation

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From the observer/enthusiast point of view, Life with Saab has summarised the day’s events quite well. It’s a piece of reasoned and measured analysis that I personally think sums up the situation nicely.

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If I can provide a rather basic summary of what’s transpired:

  • Saab had agreements in place with Youngman and Pang Da for the distribution of vehicles in China and the formation of a manufacturing joint venture. Some of these agreements were binding and some still in development. These involved Youngman and PangDa taking an ownership stake in Saab totalling just over 50%. The agreements were subject to approval to the NDRC and this process was progressing well, having passed provincial and local approval with national approval very close to being decided.
  • Mr Lofalk is reported in newspapers as having investigated a 100% takeover of Saab by Youngman and PangDa. This is in spite of the aforementioned agreements, and regardless of the fact that Saab’s reorganisation submission was based on the above agreements, and also without Saab’s knowledge.
  • Saab had a bridge financing agreement in place with Youngman for an amount of 70mil Euros, however there seem to have been complications with this agreement, to the point where Saab could not count on the full amount of the agreement being received in a timely manner. An instalment has been paid.
  • Saab sought and found alternative bridge financing arrangements in the United States, announced yesterday.
  • Despite this deal, Guy Lofalk has indicated that funding is not sufficient to continue reorganisation and has submitted an application for the reorganisation to be stopped. Saab will seek to appeal this and have Guy Lofalk replaced as administrator.

That’s not comprehensive by any means, and does not include all the side shows such as Geely, etc, but I think you should get the picture.

Some further resources:

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