Guy Lofalk, the administrator in charge of Saab Automobile’s restructuring, filed papers yesterday to give up efforts to save the dying car manufacturer. He says Swedish Automobile, who owns Saab, cannot cover the cost of restructuring.
Swedish Automobile needs to borrow $800 million to make the restructuring a success, and it has one week to respond to Lofalk’s application or run the risk of being declared bankrupt. A Swedish court is scheduled to rule on the case on December 16.
Saab will request that the courts remove Lofalk as administrator.
A New Deal Needed
Earlier this year, two Chinese automakers, Zhejiang Youngman Lotus Automobile Co. and Pang Da Automobile Trade Co, offered to buy Saab for $135 million. The deal was eventually blocked by General Motors, which had concerns over technology licensing.
In the hopes of working out a new deal, Swedish Automobile is talking with Youngman and an unnamed Chinese bank to acquire the $800 million necessary to continue restructuring.
Pang Da Automobile is not involved in the new deal.
A GM spokesman says its opinion on the sale of Saab to the Chinese has not changed but declined to provide any details on what it would take to get GM to approve a deal.
Should an agreement be reached with Youngman and the Chinese bank, it would not require GM’s approval. “We’re working on another structure where we don’t need to get a consensus from General Motors, because they don’t want to give it,” Saab CEO Victor Muller told Bloomberg. “The transaction involves loans and no shares.”
Muller went on to say there are very few days left to reach a deal that will protect Saab from creditors and that “the stakes are so high” he was confident an agreement could be reached.
Meanwhile, Saab’s 3,700 employees have yet to receive their November salaries. Two labor unions have filed legal requests for their salary.
Key Statistics – Global Automotive Manufacturing (source: MarketLine)
- Globally, the automotive manufacturing industry generated $1.2 billion in revenue in 2010.
- Between 2006-2010, the industry had a CAGR of 2.9% and production increased in 2010.
- The automobile industry is predicted to reach a CAGR of 7% between 2010-2015.
- By the end of 2015, the industry is expected to be valued a $1.6 billion.