Saab’s Survival Chances Dwindle as China Investors Seek New Deal

Saab’s Chances Dwindle as Investors Cut Offer
The about-face is the second blow to Saab’s efforts to turn around the carmaker after the company said yesterday the court administrator plans to terminate the reorganization, possibly forcing Saab to exit creditor protection. Photographer: Simon Dawson/Bloomberg

Saab Automobile’s chances of avoiding bankruptcy dwindled after two Chinese companies backed away from plans to invest in the carmaker.

Pang Da Automobile Trade Co. and Zhejiang Youngman Lotus Automobile offered to purchase Saab rather than invest in the automaker’s owner Swedish Automobile NV. The new offer was rejected, Saab said today in a statement.

The about-face is the second blow to Saab’s efforts to survive after the company said yesterday that a court-appointed administrator plans to terminate a voluntary reorganization, possibly forcing Saab to exit creditor protection. Saab said today that the court will rule on the request Oct. 28.

The two Chinese companies, which had planned to buy a combined 53.9 percent stake in Swedish Automobile, offered to buy the carmaker for a token sum after speaking to the person overseeing the reorganization, said two people with knowledge of the matter, declining to be identified discussing private talks.

“If the Chinese are not prepared to pay a reasonable value for it, the shareholders and creditors are better to let it wind up,” said Howard Wheeldon, a senior strategist at BGC Partners in London. “So much damage has been made to the brand anyway these last six months, and it wasn’t doing well before it imploded. The end is now definitely nigh.”

Swedish Automobile wants Pang Da and Youngman, which had previously offered to invest 245 million euros ($338 million), to reaffirm that they are “able and willing to consummate the agreements that are signed,” Saab’s owner said today in the statement. “Further discussions are ongoing.”

Shares Drop

Swedish Automobile dropped as much as 10 cents, or 12 percent, to 75 cents and was down 3.5 percent as of 2:34 p.m. in Amsterdam trading. The stock has dropped 76 percent this year, valuing the Zeewolde, Netherlands-based company at 24.8 million euros.

Saab, which has produced few cars since it first halted production in March because of a lack of money, avoided bankruptcy last month after a Swedish court granted the voluntary reorganization. Swedish Automobile today delayed its third-quarter earnings report to Nov. 30 from Oct. 28, citing the recent developments.

“Any plan is possible during the process of reorganization,” Pang Qinghua, chairman of Pang Da, said in a telephone interview today. “It’s possible for new proposals popping up during the process.”

Pang Caiping, executive director of Youngman’s passenger car group said by telephone that all three parts are seeking “the most beneficial plan.”

Restructuring Termination

Attorney Guy Lofalk, Saab’s court-appointed administrator, has applied to the Vaenersborg District Court in Sweden to terminate the restructuring. The carmaker will contest the decision and ask for a new administrator.

For the reorganization to continue, the court must see that Saab has cash to pay for immediate expenses. Trollhaettan, Sweden-based Saab said yesterday it received a $70 million funding pledge from North Street Capital LP, a Greenwich, Connecticut-based private equity firm.

Those funds, which consist of a loan and share sale, were aimed at ensuring the continuity of the reorganization. North Street Capital on Sept. 29 agreed to buy Swedish Automobile’s Spyker sports-car unit for 32 million euros.

Swedish Automobile said today that its agreement with North Street is unaffected by Pang Da and Youngman’s new offer.

Before it's here, it's on the Bloomberg Terminal. LEARN MORE