By Ola Kinnander - Oct 21, 2011 9:42 AM GMT+0700
Saab Automobile’s chances of avoiding bankruptcy dwindled after the two Chinese companies that had agreed to invest in the company instead offered to buy it for a token sum, people with knowledge of the matter said.
Pang Da Automobile Trade Co. and Zhejiang Youngman Lotus Automobile, which had planned to buy a combined 53.9 percent stake in Saab’s parent Swedish Automobile NV, made the offer after speaking to the person overseeing Saab’s court- administered reorganization, said the people, who declined to be identified discussing the private talks.
The two Chinese companies had previously offered to invest 245 million euros ($338 million) to help Saab stave off bankruptcy. 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.
“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 LP 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.”
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.
New Proposals
Saab has turned down the offer from Pang Da and Youngman and insisted that the two stick to the original agreement, the people said. Eric Geers, a Saab spokesman, declined to comment.
“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.”
Hu Ming, a spokesman for Youngman, declined to comment.
Attorney Guy Lofalk has told Saab he will apply with the Vaenersborg District Court in Sweden to terminate the restructuring, according to the company. 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.
The court had been scheduled to meet Oct. 31 to decide whether Saab’s reorganization can carry on. Lofalk didn’t return a message left at his Stockholm office outside regular business hours yesterday.
To contact the reporter on this story: Ola Kinnander in Stockholm at okinnander@bloomberg.net
To contact the editor responsible for this story: Chad Thomas at cthomas16@bloomberg.net
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