G.M. To Decide The Fate Of Saab Automobile Next Tuesday

Posted on 25. Nov, 2009 by in 2000-2009

The New York Times & Bloomberg report that GM will be holding a board meeting next Tuesday, December 1st where they will ultimately decide the fate of Saab Automobile.

Nov. 24 (Bloomberg) — GM’s board will review the future of the bankrupt unit at a Dec. 1 meeting, said the person, who asked not to be identified because the talks aren’t public. Directors could opt to keep Saab, as they did earlier this month in scrapping the sale of the Opel division in Germany, the person said.

Today’s pullout by Koenigsegg, which said it ran out of time to complete a deal, is the third brand sale to falter since GM’s July 10 bankruptcy exit. GM backed out of the Opel sale to a group led by Magna International Inc., and Penske Automotive Group Inc. withdrew in September from a plan to buy Saturn.

“What this indicates is it’s a pretty tough car market,” said Jim Hall, a principal at consultant 2953 Analytics in Birmingham, Michigan. While Detroit-based GM cut liabilities in the U.S. while in Chapter 11, “in Europe it’s a whole other story because they didn’t get this similar cleansing.”

GM began getting indications of a possible snag over the weekend, and Koenigsegg’s board decided yesterday to back away, the person said.

The Swedish company had sought to obtain in advance all 400 million euros ($600 million) of financing approved by the European Investment Bank, while the lender planned to disburse the funds in tranches, said a second person who was familiar with those negotiations.

‘We Believed’

“We believed in the plan, we were convinced that it would work,” Koenigsegg Chairman Augie Fabela said in a telephone interview today. “We came to the decision after deliberations over the past few days that time just ran out for us to make the deal happen. It’s up to GM now.”

Fabela didn’t give details of Koenigsegg’s decision. Rainer Schlitt, a spokesman at the EIB in Luxembourg, couldn’t immediately be reached for comment.

GM has a Saab contingency plan similar to the one being used to wind down Saturn, according to the person familiar with the automaker’s consideration of a possible Saab shutdown. Saab owners would continue to be covered by GM warranties and be assigned to a new dealership for service, the person said.

“We will take the next several days to assess the situation and will advise on the next steps next week,” Chief Executive Officer Fritz Henderson said in a statement. “We’re obviously very disappointed with the decision to pull out.”

‘Sustainable Plan’

Henderson said GM had created “a sustainable plan for the future of Saab by selling the brand and its manufacturing interests to Koenigsegg.”

Saab’s survival now depends on the emergence of a new private buyer, Swedish Industry Ministry State Secretary Joeran Haegglund told reporters today in Stockholm. The government won’t take over Trollhaettan-based Saab, he said.

GM bought the brand from Sweden’s Wallenberg family in two steps starting in 1990, betting the purchase would help reach buyers seeking European turbocharged, aerodynamic cars. The unit was unprofitable for most of GM’s ownership.

In February, after GM said it was cutting ties, Saab got Swedish court protection from creditors. Koenigsegg won the bidding for the unit in June over suitors including U.S. billionaire Ira Rennert’s Renco Group Inc. and Merbanco Inc., a group of investors from Wyoming, a person familiar with the process said at the time.

An aide to Rennert said the billionaire wouldn’t comment today on Koenigsegg’s exit, and a voice-mail message left with Merbanco President Chris Johnston wasn’t immediately returned.

Original Target

The transaction with Koenigsegg, the maker of $1.2 million high-performance cars, was supposed to close at month’s end, Saab had said. The European Investment Bank’s decision on the financing came after an initial delay.

“Time always played a critical factor in our strategy for reviving the company,” Christian von Koenigsegg, a member of the acquisition group, said in a statement. “Unfortunately, delays in closing this acquisition have resulted in risks and uncertainties that prevent us from successfully implementing the new Saab business plan.”

China’s Beijing Automotive Industry Holdings Co. agreed in September to take a minority stake in the investment team set up to buy Saab.

Saab was among four U.S. brands GM planned to unload as part of its restructuring to focus on Chevrolet, Buick, GMC and Cadillac. GM dropped Pontiac, had the Saturn deal fail and agreed to sell the Hummer sport-utility vehicle brand to China’s Sichuan Tengzhong Heavy Industrial Machinery Co.

U.S., European Sales

U.S. Saab sales slumped 62 percent to 7,441 cars this year through October, with just 513 deliveries last month.

In Europe, Saab’s biggest market, 10-month sales plunged 59 percent to 23,590 vehicles, the steepest decline among major carmakers. October sales in the region were 1,753, down 65 percent from last year, the Brussels-based European Automobile Manufacturers’ Association said Nov. 16.

As of Nov. 15, Saab planned to reduce its U.S. dealership body by 37 percent, cutting 81 of 218 dealers.

“It is surprising,” George Glassman, dealer principal of Glassman Saab in Southfield, Michigan, said of Koenigsegg’s exit. “It is not what I had hoped to hear, but I believe it’s a dead issue. In the interim, if you know of a McDonald’s, Burger King or Dunkin’ Donuts that would like to occupy my showroom, let me know.”

To contact the reporters on this story: Jeff Green in Southfield, Michigan, at Jgreen16@bloomberg.net; Niklas Magnusson in Stockholm at nmagnusson1@bloomberg.net; Katie Merx in Warren, Michigan, at kmerx@bloomberg.net.

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No Responses to “G.M. To Decide The Fate Of Saab Automobile Next Tuesday”

  1. rui barbedo

    25. Nov, 2009

    This news are concerning me seriously.
    I have two Saabs but i cant stand no more all this problems in turn of the future.
    The main responsability is probably from the swedish government. They just seem not to care about Saab only about Volvo.

    Reply to this comment
  2. Robin

    25. Nov, 2009

    Hello Ryan I guess this leaves GM with several options close it down, try to operate it correctly as its prestige world brand, remember they have decided not to sell Vauxhall/Opel in Europe, or as I suspect either sell it to BAIC or operate it as a joint venture, if as reported BAIC will produce the current 9-5 in China GM should recoup some of its investment in Saab.

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  3. anonymous

    25. Nov, 2009

    🙂 Now this feels like the right time to say “we are fucked!”
    Things couldn’t go much worse as they are. I now just hope that whatever Xmas present will GM board prepare for us about Saab, they will keep Saab in GM for now or at least restart the sales process.

    btw, is it only me, or did you also notice that the worst enemy of Saab through the last half a year sales process was the Swedish government?! I was lately wondering how can Koenigsegg take all of this mistrust and delays from Government?? It is painful to read about, but when you have huge plans and money going out of all time-frames because of more and more wait for Swedish government guarantees??? I seriously don’t blame Koenigsegg neither GM or Saab, I blame Maud Olofsson. Hope she is happy, only now there is a Much bigger problem to take care of.

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  4. Robin

    25. Nov, 2009

    I think its too early to blame any one person or company a way forward has to be found, if GM decide to keep Saab they could enter into a venture with BAIC and use the Koenigsegg/Ekar companies as partners or consultants.

    Reply to this comment
  5. peter

    25. Nov, 2009

    The Swedish Press is now saying what industry insiders have been saying since Koeniggseg were first mentioned “The Koeniggseg proposals were always a joke that could not succeed”.

    Opel were happy to stop losses by dumping Saab with anyone. Saab management wanted an investment that would secure their jobs.

    The truth is that there is no viable Saab business left to sell. The only possible solution was to sell to an existing volume car manufacturer who could replace the business elements that had been merged with Opel.

    Peter

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  6. Peter Gilbert

    26. Nov, 2009

    I feel like I am at a wedding and I am not sure if the groom did not show up, or was it the bride? The only certainty is that the shocked guests are in the banquet hall looking at all the feast that has now spoiled with food-poisoning!

    Reply to this comment
  7. Ryan

    27. Nov, 2009

    Here’s hoping there is a positive result next Tuesday!

    Reply to this comment

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