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| General Motors may shut bankrupt Saab |
| Bloomberg / Michigan Nov 26, 2009, 01:24 IST |
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Saab’s future will be decided at December 1 GM board meeting.
General Motors Co doesn’t expect to find new bidders for Saab and may shut the bankrupt unit after Koenigsegg Group AB cancelled a planned acquisition, people familiar with the matter said.
Saab’s future will be decided at a December 1 GM board meeting, said the people, who asked not to be identified because the talks are private. While directors might opt to keep the Swedish division, as they did with the Opel unit this month, GM has a contingency plan that calls for winding down the brand, the people said.
“They should just get rid of it,” said Tom Stallkamp, partner at buyout firm Ripplewood Holdings LLC, which was part of an unsuccessful bid for Opel in Germany. Saab “really doesn’t matter in terms of technology, and there is no synergy like there was with Opel”.
Closing Saab instead of selling would still help GM achieve the goal of trimming US brands to four from eight while working to return to profit after a US-backed bankruptcy. A Koenigsegg sale would have protected jobs at Saab while wrapping up GM’s affiliation with the brand by year’s end.
The collapse of that accord marked the third brand sale to falter since GM’s July 10 exit from Chapter 11. 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.
Beijing Automotive Industry Holding Co, which in September agreed to buy a minority stake in the investment team set up by Koenigsegg to take over Saab, said in a statement said it will “cautiously” reconsider its plans to buy a stake in Saab.
GM’s Saab contingency plan is modeled on its blueprint for Saturn, one of the people said. 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.”
Saab had expected the transaction with Koenigsegg Group to close by the end of this month, pumping in fresh funds to finance a ramp-up of production of older models and production of new car types.
The investment group includes Koenigsegg Automotive, maker of the $1.2 million CCXR sports car; China’s Beijing Automotive; and Baard Eker, a Norwegian entrepreneur. The team is led by Augie Fabela II, an American who co-founded Russian mobile-phone operator OAO VimpelCom.
“We’re extremely disappointed. It’s like a plane crash,” Eker said. “Our deadline was November 30 and at one week away we realised that we had so far to go that we weren’t going to make it, so unfortunately we had to call it a day.”
GM began getting indications of a possible snag over the weekend, and Koenigsegg Group’s board decided to back away, one of the people said. Koenigsegg Group 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, another person said. Rainer Schlitt, a bank spokesman in Luxembourg, couldn’t be reached on Wednesday.
“That’s it, goodnight, goodbye,” said Stephen Pope, chief global strategist for Cantor Fitzgerald in London. “Saab has reached the end of the road, there’s nothing left in the tank.”
Saab traces its roots to aircraft company Svenska Aeroplan AB, founded in 1937 to secure production of Swedish warplanes, and is based in Trollhaettan, a cradle of the country’s 19th-century industrialisation. GM bought one half of Saab in 1990 and took full ownership a decade later.
Posting losses in most of its years under GM, Saab had planned to become profitable by 2012 with annual sales of 100,000 cars, according to Christian von Koenigsegg, one of the investors in the acquisition group. Saab got Swedish court protection in February after GM said it was cutting ties. Koenigsegg won the bidding for the unit in June, and the European Investment Bank approved a 400 million-euro ($600 million) loan for Saab on October 21 after an initial delay. Saab had about 4,100 employees as of August.
Koenigsegg’s rivals for Saab included US 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.
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