IMPORTANT NEWS: National Electric Vehicle Sweden has agreed to buy the assets of Saab Automobile and the sale is expected to be finalized during the summer.

Tuesday, October 4, 2011

All eyes on the NDRC and October 14

Saab is now almost two weeks into the reconstruction. By now we can assume that the project Cheetah (cost cutting project) is well under way and that Saab is hopefully making agreements with suppliers about payments and restart of production. I have however not seen any confirmation that the EUR 70 million loan promised by Youngman has been received yet. This money is needed to secure that the employees are paid their wages in full in October and also to pay suppliers.

Regaining the suppliers' confidence is now very important. On October 31 Saab will meet its creditors as part of the reconstruction. At this meeting the creditors and the reconstruction administrator will decide whether there is reason to continue the reconstruction or not. If Saab at this meeting can present a convincing business plan, hopefully with a lower cost base than today, and if Saab has been able to come to terms with most suppliers by the meeting, then the creditors will hopefully give the company the green light to continue the reconstruction.

One supplier Saab needs to make an agreement with is Japanese supplier Takata-Petri. This supplier has filed for bankruptcy in Saab due to unpaid bills. Also the labor unions at Saab filed for bankruptcy on behalf of their members when they were not paid their wages, but now all unions have withdrawn their filings seeing that the wages have been paid.

For the creditors and the reconstruction administrator to give the green light to continue the reconstruction, Saab probably also needs to present some good news from China. News that the equity investments from Chinese Youngman and Pang Da will be approved. When Saab appealed to the Court og Appeal asking to be granted a reconstruction, the company handed in a document with the following time table for the approval:

In other words, the final approval should be secured November 8. But the government agency that everybody expect will have the final say, the National Development and Reform Commission (NDRC), will according to the plan have made its decision by October 14. That is Friday next week and more than two weeks before the meeting with the creditors. This yes is critical for Saab.

If the NDRC says yes and the Chinese companies Youngman and Pang Da becomes part owners of Saab, the board will see some changes. Swedish Automobile has called an extraordinary general meeting November 11. When the changes to the board has been executed, both Youngman and Pang Da will get two members of the board.

We can also expect to see some changes to the management at Saab. Victor Muller will step aside as CEO and one candidate to the position is Martin Larsson. He is presently Executive Director New Business Development at Saab and has had a very important role in the negotiations with the Chinese companies. According to a well placed source of the Swedish news agency TT, "The Chinese love him".

But for now all eyes are on the NDRC and October 14.