January 2012 Newsletter
Saab Automobile has finally thrown in the towel
After 64 years Saab Automobile has finally thrown in the towel. The Swedish car manufacturer has filed for liquidation with the district court in Vanersborg, Sweden. According to parent company Swedish Automobile,
After 64 years Saab Automobile has finally thrown in the towel. The Swedish car manufacturer has filed for liquidation with the district court in Vanersborg, Sweden. According to parent company Swedish Automobile, “They do not expect to realize any value from its shares in Saab Automobile” and “will write off its interest in Saab Automobile completely.”
It has been a tumultuous year for the car manufacture which has not produced a car since April. Victor Muller a Dutch entrepreneur who had been the head of sports car manufacturer Spyker , acquired Saab from GM in January 2010 for $74M in cash and $326M in preferred shares, has been unable to raise enough money to turn the brand around.
Saab automobile ran out of operating cash sometime in early 2011 and has been unable to pay suppliers and workers without bridge loans. The company had been in talks with Chinese investors, including Zhejiang Youngman Lotus Automobile, and had what amounted to a 100 percent acquisition by the latter for roughly $140M. However GM, who maintained veto power in the company through retained preferred shares, nixed the deal due to perceived conflicts with its own relationships in China.
It was apparent that the end was near when Saab’s representative to the Swedish court Guy Lofalk who had been handling its voluntary reorganization submitted papers to remove the car maker from protection from its creditors two weeks ago, stating that Saab had violated the terms of reorganization by taking on more debt.
Last week Mr. Lofalk asked to be replaced, but his request was denied. The court in Vanersborg was to determine Saab’s fate today, but Saab has made the determination for them.
SAAB Bankruptcy Proceedings Update
Saab Cars North America (SCNA) has begun an out of court bankruptcy process in hopes of keeping the entity alive long enough to find investors to buy the operation.
A third party administrator has been hired to try to help SCNA avoid creditors forcing them into filing for bankruptcy in hopes of sorting out what can be done with its remaining assets.
SCNA has indefinitely suspended warranties on all vehicles sold after GM’s sale of Saab to Spyker cars in early 2010. Some 3000 cars remain in inventories in what is left of SCNA’s dealership network. These cars are being offered “AS IS” with no warranty.
Meanwhile GM has set $100M aside in a special reserve to handle any claims that could arise from the collapse of Saab. However this reserve is earmarked mainly to settle the claims of suppliers that may have manufactured parts for the 2012 9-4X which GM planned to build in its plant in Mexico.
