Saab Automobile wants a continuation of the bankruptcy reorganization process.
Swedish Automobile N.V. (Swan) announced late Friday that it entered into a memorandum of understanding – MOU – with two Chinese companies – Pang Da and Youngman – for the sale of 100% of the shares of Saab Automobile AB (Saab Automobile) and Saab Great Britain Ltd. (Saab GB) for €100 million.
The deal occurred just a week after the Administrator for a Swedish bankruptcy court made a recommendation to stop a proposed reorganization, which in effect meant that Saab was about to be liquidated by the court.
Saab suspended worker payments in July, as the company only sold fewer than 13,000 automobiles and posted a loss of -€201.5 million (~$283 million) during the first half. The grim reality is that Saab Automobile after decades of losses, changes of ownership and financial engineering has limited financial resources and options remaining. (See Saab Files for Bankruptcy in Sweden. State to Pay Workers)
This latest episode in the ongoing Saab story (NYSE Euronext Amsterdam: SWAN) is likely not the final one in a long running thriller over the future of the former General Motors subsidiary. The proposed Chinese ownership agreement is subject to a final share purchase agreement between Swan, Pang Da and Youngman. In a statement, Swan said it will contain “certain conditions including the approval of the relevant authorities, Swan’s shareholders and certain other parties.” Translation: the entities involved include the Chinese National Development and Reform Commission, General Motors, the European Investment Bank as well as the Swedish state.
Furthermore, the €100 million will be paid in installments. An important consideration for Swan to enter into the transaction is the commitment of Pang Da and Youngman to provide long term funding in the amount of billions to retool Saab Automobile, according to Saab
The MOU is valid until November 15 of this year, provided Saab Automobile stays in reorganization, which is up to the Swedish court.
In 1990, Saab Automobile AB was created as a separate company, jointly owned by the Saab Scania Group and General Motors, and became a wholly-owned GM subsidiary in 2000. GM was unable to make a profit with the company. In February 2010, Spyker Cars N.V. of the Netherlands acquired the company from GM, after GM emerged from its own bankruptcy, as an independently-run business. Spyker morphed into Swan.
