Paul Horrell17 May 2011

Saab lives to fight another day…

…but for how long? Paul Horrell investigates the latest labyrinthine deal aimed at saving the venerable marque

Saab lives to fight another day…

Another day, another last hope rescue for Saab.
 
This time Saab has come to a preliminary agreement with Pang Da, one of China's biggest car distribution companies (which means it's a very big company). Pang Da is to give Saab £26 million upfront, and £13 million in a month, for new cars. The idea is this cash will get production lines moving again.
 
Within weeks, if the various governments and banks allow it, it will front up another £57 million in exchange for a stake in Spyker, Saab's parent company.
 
Saab has been stricken for a month now, building no cars because it can't pay its suppliers for the parts. In the meantime, Spyker has been chasing frantically around, apparently agreeing several different financing agreements, only to have them all knocked back.
 
Here's a quick summary. Concentrate.  
 
One of Spyker's major investors was a Russian, Vladimir Antonov. But the European Investment Bank (EIB), which helped finance the Spyker bid for Saab, and the underwriting Swedish National Debt Office (NDO), didn't like the cut of Antonov's jib. There were allegations of money-laundering. So he was frozen out of the Saab investment, while the NDO investigated him. Meanwhile, Spyker actually sold its Spyker supercars business to Antonov.
 
But without the major Antonov investment, Saab ran so short of money it tried to sell its factory for cash (to an Antonov company) and then lease it back. In mid-April Spyker’s CEO and Saab Chairman Victor Muller told us: ‘He’s a Russian 35-year-old billionaire, so people will talk. But he’s clean as a whistle. As. A. Whistle.’ Sure enough, following an investigation he was found clean by the EIB, who approved Antonov as an investor. But they still won’t allow him to infuse the money.  

Meanwhile CEO Muller, in an endless round of deal making at the start of May, found more money from Gemini Investment Fund.
 
More significantly, the next day he also agreed with medium-sized Chinese car maker Hawtai a deal for Hawtai to take 30 per cent of Saab, as well as providing immediate money to get production going.
 
But the various authorities who have to approve these deals - the EIB, the Swedish National Debt Office, the Swedish government itself, and the Chinese government - move at a snail's pace in granting approvals, and indeed seemed to put up more objections every day.
 
Sure enough at the end of last week, the Hawtai deal was put on ice. Not killed, but paused, with Saab being allowed to look for other investment.
 
In the meantime, suppliers are in danger of going out of business, and it gets harder and harder to re-start the lines. And to shore up buyers' confidence.
 
Yesterday, three days after the Hawtai deal went flat, in came the announcement of the Pang Da deal. Gosh, another Chinese company we've never heard of. A deal that was set up in a matter of days. Spyker claims it will be easier to get the Chinese approval for this, because it doesn't involve a local manufacturer. Though longer-term, Pang Da does want to start making Saabs there, and then to set up a local diffusion brand.
 
You can't fault Victor Muller's incredible energy. But the fact is it took a year to set up and get approvals for the deal for Volvo to get its new Chinese parent. Will the Pang Da deal really go through? Will Antonov be allowed to invest, to fund the new models?
 
Saab has some interesting new cars in the pipeline, and a clever business model for getting them built using technologies from outside. It's peered over the cliff before. But with every passing day, we're starting to wonder whether it can get past this current crisis.

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