Saab Chairman Victor Muller has a week to save his company.
Despite repeated reprieves, it appears time finally is about to run out on long-troubled Saab, the automaker’s court-appointed administrator saying it is time to end the company’s reorganization process – a move that would almost certainly put Saab into insolvency.
The announcement by administrator Guy Lofak follows word that General Motors has refused to approve a deal that would allow Saab to sell a major stake to a consortium teaming Chinese automaker Zhejang Lotus Youngman Automobile and a so-far unidentified Chinese bank. GM, Saab’s former parent, has the right of refusal on any sale and has said it fears that such a deal would result in the transfer of its technologies to the Chinese.
Nonetheless, “We still have five to six days to do it,” a Saab spokesperson said, referring to the likely time it would take for the courts to respond to Lofak’s request. In the meantime, the near-bankrupt maker intends to continue searching for new partners or for a way to get GM to reverse its objection to a sale.
The crisis at Saab started even before GM decided to sell the company to the Dutch-based company now known as Swedish Cars, in early 2010. The U.S. maker, fresh out of its own bankruptcy, had already dismissed Saab’s board and shut down its headquarters assembly plant in Trolhattan, Sweden. The delay in restarting the plant created a financial shortfall for Saab that, by early 2011 meant it was struggling to pay its bills.
In March, several key suppliers launched a boycott and the factory has effectively been idled ever since. Facing the threat of collapse Saab sought court approval to reorganize its finances, a step short of bankruptcy under Swedish law. But administrator Lofak has repeatedly expressed his skepticism, even as Saab management has repeatedly announced a series of potential deals meant to save the company.
Meanwhile, creditors including Saab’s worker unions, have pressed for a full bankruptcy.
One after another, the various deals worked up by Saab have fallen apart, starting with a bid by Vladimir Antonov, a Russian oligarch and former partner of Saab Chairman Victor Muller, to invest in the company.
The most promising offers came from Youngman Lotus and the Chinese dealer network Pang Da, but their joint bid for a majority stake in Saab was initially delayed by Chinese regulators. With Saab ready to collapse they revised their offer – cutting their bid by nearly two-thirds, to $135 million, even while demanding a complete takeover of the Swedish company.
The fly in the ointment was GM, which has said it wants to ensure its proprietary technology doesn’t land in the hand of any Chinese company that it might have to compete with. GM is currently the largest manufacturer in the booming Chinese market.
This week, Saab unveiled yet another revised deal, this one pairing Youngman Lotus with an unspecified Chinese bank. But, yet again, GM rejected the deal.
While the Chinese automaker has provided a small sum of cash, as has another equity fund, administrator Lofak told the courts Saab simply hasn’t been able to raise enough bridge financing to maintain operations while its long-term finances were resolved. And, what he termed as GM’s “categorical no” appears to leave little chance anything will come along later.
While Saab has a week to offer its response the district court handling its case will deliver a decision on December 16. Barring a breakthrough that could win over Saab its chances of survival now stand at slim to none.