Following are a number of questions and answers that I know are on people’s minds with regards to the recent deal Saab struck with Hawtai Motor Group, from China.
Q: What does this deal mean for the financial future of Saab Automobile?
This agreement with Hawtai, along with the convertible loan agreement with Gemini, means that Saab has effectively satisfied it’s short-medium term funding needs. This is subject to certain conditions, of course, but we believe these conditions should be met OK. A big part of our financial future involves the building and selling of Saab cars and we’re working hard with our suppliers in order to begin production as soon as possible. There will be a limited amount of production tomorrow (Thursday 5th May) and we hope to build on that progressively though the next week.
Q: Will this deal change the ownership structure of Saab and Spyker?
Saab is owned by Spyker and that will not change. What will change is the ownership structure of the parent company, Spyker Cars NV. Hawtai Motor Group will become a large minority shareholder in Spyker Cars NV, signing up for a 29.9% stake in the company. These will be new shares, which is why it’s fresh funding into the company. If Hawtai’s stake ends up being more than 29.9% based on the agreed price and capital contribution, they will sell the excess to an independent third party (or parties) in order to get under the 29.9% cap.
Q: The agreement is subject to consent from certain Chinese governmental agencies, the European Investment Bank, the Swedish National Debt Office and General Motors. So how ‘done’ is this deal really?
A: The agreement is indeed subject to a number of regulatory approvals, but we don’t foresee any obstacles to it being approved, and we expect the deal to be completed in a timely manner.
Q: Why did Saab choose Hawtai as a partner? There were reports that you were also talking to other Chinese car manufacturers.
A: Spyker and Saab have held exploratory talks with several prospective partners in recent times. Each potential partner had its merits, of course. In the end, Hawtai was seen as the best fit and we’re convinced that our mutual interests are served best through this agreement.
Q: What’s the brief on Hawtai? Who are they and how big are they?
A: Hawtai is a privately owned, premium Chinese car manufacturer. They have 4600 employees at the moment, including 120 foreign workers giving expert advice on their development. There are many similarities between Hawtai and Saab, with both companies being of a similar size and with a growing sales volume. Hawtai have invested significantly in the expansion of their production capacity and now have the facilities to build 350,000 cars, 300,000 diesel engines and 450,000 transmissions.
Q: What does this agreement mean for Saab’s plans to produce cars in China?
A: The agreement that’s been signed between Spyker and Hawtai includes both production and distribution of Saab branded vehicles in China. Saabs for the Chinese market will be mostly produced in China, which is an essential and cost-effective solution to gaining a better footing into the world’s biggest car market. More details on which models will be produced, imported and exported with regards to China will be forthcoming at a later date.
Q: There is a technology sharing agreement as part of this deal. What does that mean?
A: Both Saab and Hawtai have technologies and expertise in fields that could be of interest to one another. We’re confident that both parties will benefit from this partnership as time progresses. However, at this point we can’t provide any more specific detail as to what would be shared, nor what model vehicles any technologies might apply to.
Q: Can you say any more about the joint ventures of manufacturing and distribution that were mentioned in the press surrounding this deal?
A: The proposed set-up is currently being reviewed by our financial and legal team, so we have an agreement in principal, you could say, but we expect the details to be signed off in due course. It includes a joint venture for manufacturing and one for distribution of both imported and locally produced vehicles.
Q: What about CATC? Several months ago, Saab signed them up to take care of distribution in China.
A: We have to be mindful here of the distinction between importing and distribution. CATC will still be responsible for the importation of Saab vehicles into the Chinese market. Together with Hawtai, Saab will distribute the vehicles and set up manufacturing, too. This arrangement will complement our current agreement with CATC.
Q: Now that you have secured financing, how will you win back confidence in the marketplace? How can you convince people that this will not happen again?
A: With the current agreements in place (Gemini and Hawtai), we believe that we will be able to stabilise operations and restart production, which is the essential first step. Saab and Spyker are totally committed to restoring confidence amongst our employees, dealers, suppliers, customers and other stakeholders as soon as possible and we are working hard towards achieving that. In the end, it all comes down to product and we believe that our new products will be well received, but we know that have to work hard to give them the visibility they need in the marketplace.
Q: How do the deals announced this week effect the intentions of Vladimir Antonov? Is he still a candidate to become a shareholder in Spyker?
A: Mr. Antonov has consistently stated that his intention is to become an investor in Saab/Spyker and that has not changed. After recently receiving approvals from the National Debt Office here in Sweden, as well as General Motors, Mr. Antonov is now awaiting approval from the Swedish government and the EIB.
Q: What about Saab’s business plan? Is that up for review after recent events?
A: Spyker and Saab stated on March 29 that they would review their full-year targets. Whilst we’re encouraged by the support we’ve received (we have an order book of approximately 5,000 vehicles awaiting production when we restart), it would be reasonable to assume that previously communicated targets will not be met given recent events. At this moment it is too early to tell what the exact consequences of those recent events will be for the confidence in our company, or to give a new forecast.