Saab Automobile terminates an agreement with Chinaâs Hawtai Motor Group meant to secure medium-term funding for the cash-strapped Swedish auto maker, clouding its future once again.
U.S. Saab dealers witnessing the car companyâs topsy-turvy fortunes in the last 18 months are keeping their spirits up in the face of the latest bad news.
âThis is a company with the technology to bring great products to the market, but theyâve got to get their financial house in order,â says George Glassman of Glassman Saab in Southfield, MI, a seller of the iconic cars since 1981. âAt the end of the day, weâre back at square one.â
Saab-parentCars, which bough the auto maker from last year in a transaction valued at $400 million, says Hawtai could not âobtain all the necessary consentsâ of various stakeholders to seal the deal.
âThe parties were forced to terminate the agreement with Saab Automobile andwith immediate effect,â Saab says in a statement today. âThe parties will continue their discussions about a possible cooperation.â
However, negotiations to secure short- and medium-term funding for Saab will no longer be exclusive to Hawtai. Saab now is in talks with other potential Chinese partners on equity and debt financing, or financial support combined with technology licensing.
Hawtai would have acquired up to 29.9% of Spyker for E120 million ($173 million), plus E30 million ($43 million) in the form of a convertible loan agreement.
Bernie Moreno, owner of Saab of North Olmsted outside of Cleveland, expects a positive resolution. âFrom my perspective, this is all part of the negotiation process,â he says.
Adds Moreno, who just opened a new $4 million Saab showroom: âIt doesnât worry me for a second. This is a complicated process, and I have full faith in (Spyker-owner) Victor Muller.â
Saab says it continues to work with the European Investment Bank to obtain access to the remaining E29 million ($41.6 million) in lending for the auto maker backed by the Swedish government and won shortly after breaking off from GM.
Gaining the rest of the EIB funding hinges on the sale of certain Saab property put up as collateral for the loan. The auto maker indicated last month it may not immediately find a buyer. The sale would reduce the EIB loan pledge from E400 million ($574 million) to E280 million ($402 million).
Once Saab can tap the remainder of its EIB funds, the auto maker plans to restart production at its Trollhattan, Sweden, assembly plant that has been down for weeks. However, the restart may require new payment agreements with key suppliers.
Saab recently landed a E30 million ($44 million) loan from a private-equity partner as short-term funding, and Russian banker Vladimir Antonov was cleared last month to join as an investor.
Earlier this year, Muller sold the companyâs sports-car business to Antonov for a reported E15 million ($21.5 million) to focus fully on reviving Saab.
At the close of the first quarter, Spyker-Saab held E255.3 million ($366.2) in operating cash but could not make supplier payments, leading to the factoryâs shutdown.
The new-for-â11 Saab 9-4X cross/utility vehicle developed while under GMâs wing went into production earlier this week at GMâs Ramos Arizpe, Mexico, assembly plant. A redesigned 9-3 sedan, Saabâs bread-and-butter vehicle, is due next year.
Earlier this week, Saab lured Timothy Colbeck away from thriving Subaru to run its North American operations. Colbeck told Wardâs in an earlier interview he expected a resolution soon to Saabâs financial impediments.
âI wouldnât be here if I wasnât confident,â he said at the time.