Press Release: Saab Automobile AB Files For Voluntary Reorganization

The following is a release from Swedish Automobile:

——

7 September 2011

Saab Automobile AB Files For Voluntary Reorganization, Saab Automobile Parts AB And Overseas Subsidiaries Excluded

Trollhättan, Sweden: Swedish Automobile N.V. (Swan) announces that Saab Automobile AB and its subsidiaries Saab Automobile Powertrain AB and Saab Automobile Tools AB (collectively Saab Automobile) will file for voluntary reorganization today at 09:00 CET with the District Court in Vänersborg, Sweden. Swan and Saab Automobile are of the opinion that, considering Saab Automobile’s current limited financial resources, a voluntary reorganization will entail the best preconditions for using existing resources in the most efficient way. The eventual purpose of the proposed voluntary reorganization process is to secure short-term stability while simultaneously attracting additional funding, pending the inflow of the equity contributions of Pang Da and Youngman.

The proposed voluntary reorganization will be a self-managed, legal process under Swedish law headed by an independent administrator appointed by the court who will work closely with the Saab Automobile management team. As part of the process, Saab Automobile has formulated a reorganization plan, which includes a number of aspects aimed at lowering its cost-base and creating a viable, competitive and independent organization. This reorganization plan will be presented to creditors in more detail within three weeks of the filing, although this period could be extended by the court.

Following court approval, the voluntary reorganization will be executed over an initial period of three months. If required, the reorganization period can be extended by another three months, up to a maximum of twelve months. Swan and Saab Automobile are confident that they will secure additional short-term funding for the reorganization period and are currently in negotiations with several parties about obtaining such funding. Funding for Saab Automobile to exit reorganization has been secured through binding agreements with Pang Da and Youngman as announced on July 4, which agreements are, however, subject to obtaining certain approvals.

As part of the reorganization filing, the court-appointed administrator will apply for the Swedish state’s wage guarantee scheme to allow wage payments to all Saab Automobile employees to be made. August salaries are expected to be paid within a short time frame following the court approval. With regards to outstanding debts to creditors, Saab Automobile will seek the support of its creditors for the reorganization process and is confident it will obtain this support, particularly because Saab Automobile aims at full redemption of outstanding debts.

Saab Automobile has proposed that the District Court appoints Swedish lawyer Guy Lofalk as administrator, who also was the administrator in the successful 2009 Saab Automobile reorganization. Victor Muller, CEO of Swan and CEO and Chairman of Saab Automobile, and the Saab Automobile management team will cooperate closely with the administrator to execute the reorganization plan. The voluntary reorganization process will cover Saab Automobile AB, Saab Automobile Powertrain AB and Saab Tools AB. All other entities, including Saab Parts AB and all overseas entities such as Saab Great Britain and Saab Cars North America, are excluded from the reorganization.

The reorganization plan contains a blueprint of how Saab Automobile’s Management expects to improve Saab Automobile’s business model with an emphasis on an independent, lean and competitive organization. Many key elements of Saab Automobile’s original business plan remain, as Management believes the objectives of the overall strategy remain intact. Through the roll-out of a fully rejuvenated product portfolio, partnerships with Chinese firms Pang Da and Youngman that will ensure access to the world’s largest and fastest growing market, and a strong and global brand, Saab Automobile is well-positioned to realize its objective of becoming a viable independent premium car manufacturer.

Victor Muller, CEO of Swan and CEO and Chairman of Saab Automobile, said: “Since securing the long-term funding through conditional agreements with Pang Da and Youngman, who both support this voluntary reorganization, we have focused on securing funding to bridge the period until we receive their funds. We have concluded that a voluntary reorganization process will provide us with the necessary time, protection and stabilization of the business, allowing salary payments to be made, short-term funding to be obtained and an orderly restart of production to be prepared.”

“While the voluntary reorganization process will no doubt present us with a number of tough issues and decisions, I believe that Saab Automobile will emerge stronger from this process. The potential for Saab Automobile as a viable, independent premium car manufacturer is there, as shown by the rejuvenation of our product portfolio, approximately 11,000 orders and the conditional long-term funding already in place through the binding agreements with Pang Da and Youngman that will give us access to the Chinese market.”

“I would also like to express my deep gratitude to our employees, dealers, suppliers and all other stakeholders who have been so patient and understanding in the past trying months. I realize that we have severely tested their patience, but it has been heartening to see that in general, our employees, dealers, suppliers and other stakeholders have stood by us through this tough period. I look forward to continuing these relationships and collectively start building a brighter future for Saab Automobile.”

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34 Comments

  1. Ber till de ansvariga på Vänersborgs tingsrätt att inte tillåta detta en gång till. Saab Automobile hör hemma i historieböckerna nu!

    Praying and hope that the personal on Vanersborgs tingsratt don’t allow this second time. Saab Automobile belongs to the history books now!

      1. Inse fakta att Saab Automobile inte kan finnas kvar av enbart nostalgiska skäl. Företaget måste också kunna leva på sin försäljning utan att andra får betala. Kan man inte leva på sina produkter är det läge att lägga ner.

        Face the facts that the company can not remain only on nostalgic reasons. The company must be able to live on their products without others who pay money for it to go around. If the company can not live on their products, it is time to pull out the plug. 

  2. Sad to hear. I really hope fro the best for this amazing, innovative and outstanding car-manufacturer; the most interesting among person-car-manufactures.

  3. I trust this will safeguard the employees that are the weak ring in the chain …

    then we have to hope that the Chinese deal will come to fruition to save the company …

    having said that, one part of the press release made me curious, where it mentions reducing the cost base ….

  4. I think reconstruction is a very considerate move by Victor and Saabs management. It is respectful towards the employees and it still shows that they are willing to spend even more working hours to save Saab than they already have! A lot of others would have quit a long time ago! Me together with the rest of the SaabsUnited Crew will continue to support Saab no matter what!  / Tim, http://www.SaabsUnited.com

  5. This was the best that could happen.
    Saab have to much good things coming. I hope that they will find a new CEO soon, like JAJ.
    VM have done a great job(Saab could have been dead for a long time ago if it wasnt for him), but he shouldnt be sitting in to seats.
    Curious how the new 9-3 looks and act… so hope everything works out in the end.

  6. So this means, no production for the coming four (or more) months? How will the dealers survive this? Will there be enough new orders? How can Saab become even smaller (lowering the costs..)? So, I have no good feelings about this. Hope I’m wrong. 

    1. Why would it mean that? During earlier reconstruction, and other companies’ reconstructions, the production has been going on. The time is set to three months, seems to be standard, and could be prolonged with a later decision by the court. The close would probably be when certain goals are met; but during that time debts could have been paid and production started. Nothing says that there can’t be production during reconstruction, rather the contrary I think. There *ought* to production in any company as soon as possible. I think one should not speculate too much; looking at it from the outside there is lot we don’t know. Funds can arrive at different dates allowing debts to be paid in stages and production started etc. etc.

        1. Could be, true. But there are so many different scenarios, depending on when they get funds, if some may say; and if they get funds from several sources at different times; how the negotiations with the suppliers and other work out. I find it completely meaningless to speculate, with so many different scenarios, looking at it from the outside. Let’s say the suppliers get quite a large chunk early, the next part say within XX days from that, and then the last part; wouldn’t that change the negotiations a bit?

          The mention of cash on delivery popped up this spring, when there were talks about 10% initially, the rest later. This is a different game now; the suppliers stand to lose quite a lot. If they work together with Saab, and I understand that many suppliers are doing that, and given some of the different scenarios I mentioned, and Saab’s revised business plan, one can’t say that they will all demand COD.

  7. I’m putting together some more contextual (i.e. non-press release) information at the moment and hopefully that’ll shed some light on some of the salient points regarding this announcement.

  8. I like the bit that says “….because Saab Automobile aims at full redemption of outstanding debts.” Wasn’t the word “aim” used when describing the ambition to pay salaries.

  9. It’s all a very uncertain situation. To approve a reconstruction the court must KNOW for sure that there exists secure financing, and the court cannot “hope” for the Chinese money to turn up – they must know it will i.e. see a paper saying the money will arrive.

    In order for suppliers to agree to drop the debt they will want to see guarantees that there is future funding, and I would assume this goes way beyond the 245 million Euros since a portion of that will go to debts. How much probably depends on the level of funding post-reconstruction.

    What’s more, if there is a fresh start after reconstruction the salaries payed out by the state during reconstruction need to be payed back i.e. further increased debt.

    1. Sadim, we’re not asking for suppliers to drop any debts.  I think you’ve seen that in the release and if not, you should have.

      Again, I’ll have more contextual information about this process later this afternoon.  I recommend that you suspend your speculations until later (this one alone will expire in a couple of hours).

      If you’re interested in seeing a positive outcome for this process, then I welcome your contributions here.  If your purpose is to debate the meaning of individual words and promote sidetracked discussion and a pessimistic view of everything that happens, I will ask you to leave (and I don’t think that would be a surprise outcome for you).  

  10. “While the voluntary reorganization process will no doubt present us with a number of tough issues and decisions, I believe that Saab Automobile will emerge stronger from this process. The potential for Saab Automobile as a viable, independent premium car manufacturer is there, as shown by the rejuvenation of our product portfolio, approximately 11,000 orders and the conditional long-term funding already in place through the binding agreements with Pang Da and Youngman that will give us access to the Chinese market.”

    There are a few roadblocks. You get the impression that everything is riding on the China card. As for the orders, mine is unfortunately cancelled as of today. Let’s just say the retailer didn’t exactly attempt to talk me out of it either. I’ll be putting my orange 99 in store for the winter and polish it up for a few rides again next summer. As for getting a new ride, my 2007 9-3 is going to be traded in for some other premium make. Good luck to everybody, and a special thanks for Swade for at least trying to keep us posted over the months. The company publicists could take a leaf out of your book, you were the thread that kept this customer hanging on for as long as I did.

  11. Just as a reminder:  Saabs former parent company, GM, went through a chapter 11 (which is almost the same as what Saab aims at) and got out pretty strong. So, why some people are telling this is almost bankruptcy is beyond me, they clearly do not understand what a reorganisation like this is: It means that Saab can clean the house, work out new deals and build again, without the constant threat of creditors running to court to ask for a bankruptcy.

  12. I think one of the biggest problems SAAB have is the credabillity issue! Even me that love SAAB cant recommend anyone to buy a SAAB in the 1-2 years forward! And Victor Muller togheter with Swedish Automobile is the biggest problem in my eyes. Remove them and the credibillity might come back quicker.

    1. Nick, I understand that some of the things that have been said haven’t come to pass and that creates credibility issues for the company.  As someone who sees VM at work and has seen the incredible effort he’s put in over the last 5 months, I can tell you that your observation (which I know a number of people share with you) is off the mark.

      A lesser man would have let Saab wither months ago.  Don’t take your opinions of VM and SWAN from stuff written in the press.  They’re very easy targets, trust me, and one day perhaps the full story will come out as to what’s happened here in the last months.

      We now we face a battle to win people’s confidence and we’ll take that on.  The only solution is product – packaging and marketing it as best we can.  

  13. I’m very interested in seeing how this pans out.  Again, hoping all for the best!  I (along with atleast 35 others that I was with at Swedish Car Day 2011) are standing by you guys in Sweden. 

  14. As it’s been said , this is to reorginise , Closed and bankrupt are 2 very differant things . SAAB could have up to 1 year to do a reorganize of their business , and that will include a lot of business decisions that are beyond the scope of this venue,
    this is a chat room and anything here is just  “chat ” .  I’m backing  SAAB we here have no clue as to what is going on in the business side . I’m sticking with SAAB because that is what I do , everyday for my living . Tommrow I’ll still be doing the best I can to keep customers happy with their SAAB Cars.  Thanks , Dave , Columbus OH , USA
     P.S. Thank you Swade your doing well in a rough time , your one of the ” People of SAAB ”  =) 

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