By now, most of the world is aware that Swedish car manufacturer, Saab Automotives, is on a railway running low on track. They’re manufacturing plant is already a ghost town, the Swedish courts have already awarded them temporary amnesty from creditors and now Saab is running out of gas and there doesn’t appear to be a gas station in sight. According to Autoweek.com, Saab has ended their proposed deal with Chinese investors and as a direct result, they have lost their last wild card in their hand.
As it was reported in recent weeks, Saab has been waiting on a $340 million investment deal from Chinese automotive companies Pang Da and Zhejiang Youngman Lotus. The deal, originally intended to drive Saab out of debt and back into the grind of automotive manufacturing, has been speculated on for months now. Earlier in the month, Saab was set to receive the first part of this million dollar deal as a loan to pay off parts providers. They had thought the rest of the deal would come through by now, but the Chinese investors reportedly wanted to reevaluate the agreement. The result? The Chinese investors decided it would be more practical to buy out the majority of shares in Saab stock and take over ownership of the troubled manufacturer. The leaders of Saab did not find this to be a good thing. They announced they were killing the deal all together.
Believing that allowing Youngman Lotus and Pang Da to take control of the company would bring the eventual end to Saab, Swedish Automotive CEO Victor Muller deemed the agreement unacceptable and ended the agreement Sunday after the Chinese side did not specify they would provide the original investment that had been agreed upon already. The two sides are still in contact, though this may be as far as the two parties go together.
Towards the end of last week, US private-equity firm, North Street Capitol, announced they would be buying $10 million worth of shares in Saab’s parent company, Swedish Automotives. They also claim to be providing the company with a $60 million investment loan to pay for the reorganization of Saab. One can’t help but feel that this announcement has lead Saab to feel stronger in the passing days. Strong enough, at least, to refuse the continual shadow games played by the Chinese investors who had been holding out for unknown reasons.
Whether or not this is the best strategy for Saab, who without enough capitol to bail themselves out would have to accept defeat and liquidate entirely, is uncertain. What is certain is that any light of redemption in the near future for Saab has dimmed immensely. They have a lot of bills to pay back before they can even make another car, let alone pay new parts and wages fees to produce it. It is because of this that Sunday’s move from Saab is somewhat puzzling. Their new found bravery may end up steering Saab off the edge of the world either way. If that happens, it wouldn’t have mattered if Saab might have been lost under a Chinese regime change. Saab won’t exist. At least for now, they still do. We’ll see about next week.
Tyler Baker; OSM Writer
( Source : Autoweek.com )