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Friday, 28 October 2011

Yet again: New developments in the Saab soap. Will China come to the rescue anyway?

And again Victor Müller, the Dutch CEO of Swedish Automobile N.V., the current holding company for Saab Automobile AB, has managed to pull a rabbit out of the hat.

Victor Müller’s company Swedish Automobile already briefly passed the review in my SMS from Ernst (17), because it withdrew from a proposed deal with Pang Da and Youngman to the amount of €245 mln in exchange for a 54% stake of the shares in Swedish Automobile and Saab AB.

But today Victor is back with a new deal, but with the same two Chinese companies. Here is the press release that was issued by Swedish Automobile this morning:

Zeewolde, The Netherlands, 28 October 2011 - Swedish Automobile N.V. (Swan)
announces that it entered into a memorandum of understanding with Pang Da and Youngman for the sale and purchase of 100% of the shares of Saab Automobile AB (Saab Automobile) and Saab Great Britain Ltd. (Saab GB) for a consideration of EUR 100 million.

Final agreement between the parties is subject to a definitive share purchase agreement between Swan, Pang Da and Youngman, which will contain certain conditions including the approval of the relevant authorities, Swan’s shareholders and certain other parties. The consideration of EUR 100 million will be paid in instalments.

An important consideration for Swan to enter into the transaction is the commitment of Pang Da and Youngman to provide long term funding to Saab Automobile. The administrator in Saab Automobile’s voluntary reorganisation, Mr. Guy Lofalk, has withdrawn his application to exit reorganisation . The MOU is valid until November 15 of this year, provided Saab Automobile stays in reorganisation .

When the news was published on BNR (Business News Radio), there were some cheers among the presenters. These people have probably quite short memory spans:

The funny thing about this press release is actually, that Pang Da and Youngman seemed to have lost some money on the way, as their wallet now suddenly contains €100 mln for 100% of the Saab stocks, instead of the €245 for 54% of the stock in Saab and Swedish automobile.

That this €100 mln deal is without the Dutch brand of luxury sports cars Spyker (another part of Swedish Automobile) could be interpreted by outsiders as that the value of the Spyker brand is estimated to €354 mln. That is grossly exaggerated. In reality, it probably means that Pang Da and Youngman came to their senses and estimated that €100 mln is probably more than enough for the eternal bleeder Saab.

People reading this should realize to other things:
·     Neither the Chinese, nor the Swedish government did approve of this deal. It is very doubtful if they will and if they will do so in time to save the Swedish automaker?!
·     This afternoon, a Swedish justice can decide that the current ‘suspension of payment’-situation is not legally admitted and then Saab could be finished immediately.

Summarized, you can state that Saab is still in very dire straits and that Victor Müller is currently operating like a cornered cat. That is: a cat with 9 lives, but still.
This can also be seen from the following press release that was also issued today, but that didn’t make it to the radio:

Zeewolde, The Netherlands, 28 October 2011 – Swedish Automobile N.V. (Swan)
announces that it issued a subscription notice for 3 million shares under the current EUR 150 million equity facility between Swan and GEM Global Yield Fund Limited.

The exact number of shares to be issued and the price thereof will depend on the pricing period which commences today.

In light of recent developments, North Street Capital, LP will not subscribe for 2.3 million shares in Swan and revoked its commitment to provide a loan of USD 60 million to Saab Automobile.

I can’t interpret this differently than that North Street Capital, LP woke up after having a bad dream about the chances of survival for Spyker and withdrew its offer. Cornered cat Victor Müller took another wild jump and opened a subscription for the issuances of 3 mln shares. Would you like to buy one? I don’t!

This article reflects only the opinion of the author and should not be handled like an investment advise.

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