No options left, Muller pulls plug.
Victor Muller, the Dutch entrepreneur whose small firm purchased Saab from GM personally appeared in the Vanersborg District Court, in southwestern Sweden, this morning to hand in the bankruptcy papers. The move came days after Saab had won one last reprieve, the court firing the original administrator and giving the automaker a chance to come up with a workable deal with the Chinese automaker Zhejiang Youngman Lotus, which had offered to purchase Saab outright.
It is up to the courts to now decide what to do with Saab’s assets, and though there remains some hope they could be purchased in their entirety it is uncertain whether the now-bankrupt maker has much to offer anyone else in the industry. While its headquarters factory in Trollhattan, Sweden is considered one of the Continent’s more modern there is already a glut of capacity and many manufacturers are looking ways to cut production rather than add to it.
While Muller didn’t speak with the media, a statement from Saab suggested that General Motors was to blame for the company’s final collapse. GM had notified Saab that it would not approve a sale to the Chinese.
“Saab’s various new alternative proposals are not meaningfully different from what was originally proposed to General Motors and rejected,” said GM spokesman Jim Cain. “Each proposal results either directly or indirectly in the transfer of control and/or ownership of the company in a manner that would be detrimental to GM and its shareholders. As such, GM cannot support any of these proposed alternatives.”
The U.S. maker emerged from bankruptcy is mid-2009 agreeing to shutter or sell four of its eight North American brands. By the end of that year it had dismissed the Saab board and was in the process of closing the company down when Muller, through what was then known as Spyker Cars, made a last-minute offer GM eventually accepted.
But Saab tumbled into financial disarray early this year, forcing Muller and Spyker – newly renamed Swedish Automobile – to seek new investors. A series of deals fell through, including one with the Russian oligarch Vladimir Antonov, a one-time partner of Muller’s. With no major U.S., European, Japanese or Korean automaker interested in helping out, Saab turned to the Chinese.
A series of initial offers either fell through or were delayed by China‘s regulators, however. By last week, Saab seemed to have only one option left, the ambitious Chinese automaker Zhejiang Lotus Youngman offering limited funding while a complete acquisition was negotiated.
But GM reiterated its position that it would not support a Chinese takeover. Such a move would threaten the U.S. maker’s own presence in the booming Asian nation – and would do so using GM’s own technology, since it continued to provide the powertrains for most Saab products and even manufactured Saab’s new 9-4X crossover at a plant in Mexico.
As a result of GM’s position, “Youngman informed Saab Automobile that the funding to continue and complete the reorganization of Saab Automobile could not be concluded,” said the Saab statement.
“The Board of Saab Automobile subsequently decided that the company without further funding will be insolvent and that filing bankruptcy is in the best interests of its creditors,” the maker added. “It is expected that the Court will approve of the filing and appoint receivers for Saab Automobile very shortly.”
An executive with Youngman told the Associated Press that the Chinese company had continued to seek a solution, holding a conversation with Muller and his associates as late as 1 AM this morning, though in the end there appeared to be no alternative but bankruptcy.
The announcement comes just days after it appeared Saab won its latest reprieve. The maker has been operating under a court-appointed guardian since September, as part of a process designed to let it clear up its finances. Saab officials were supposed to appear in court on the 15th to deal with a recommendation by its administrator that the company be forced into bankruptcy. But, instead, administrator Guy Lofalk was relieved of his duties and the courts delayed the hearing, Saab finally expecting to get a cash infusion from China’s Youngman.
Saab’s Swedish parent, SWAN, is writing off its entire investment and does not expect to receive anything from a sale of the Swedish maker’s assets.
It is unclear precisely how much Saab owes to workers, parts companies, bankers and investors, but it had already run up significant debt to its suppliers by last March when several decided to boycott the maker, bringing production at the Trollhattan plant to a halt.
Production briefly continued on the 9-4X but GM held up the 2012 model waiting to see if Saab would come up with an acceptable survival plan.
But it made it clear that Chinese ownership was out of the question.
Originally founded by a group of Swedish aircraft engineers looking for other options as World War II drew to an end, Saab has had a long-running reputation for building “quirky” and unusual products. But it has been struggling for survival almost since it was founded.
GM acquired a 50% stake in 1989 then took full ownership in 2000. But it never was able to build up demand to the point that Saab could justify the investment in resources. Production peaked at 133,000 in 2006, but fell to just 93,000 in 2008, just before the maker was forced into bankruptcy.
While the Saab factory was considered one of the most modern in the GM global manufacturing system it seems doubtful to most observers that a buyer will be found. Europe is already awash with excess production capacity and the factory operates far from the Continent’s main auto supply network. Add the high cost of doing business in Sweden and it may quickly become a relic of past hopes lost in today’s bankruptcy filing.