By Jim Taylor, Editor MACS ACtion Magazine
It wasn’t unexpected in light of the company’s difficulty in finding long and short term financing, but as deal after deal collapsed the Swedish company was cut off by many suppliers for non-payment and finally became unable to even pay factory workers in August.
SAAB has entered voluntary reorganization, the rough equivalent of filing for Chapter 11 bankruptcy in the U.S. A slightly trimmed copy of the company’s press release follows. Although it states that SAAB Cars North America is not part of the reorganization, we wonder about the future of SAAB dealers on this continent. At one time SAAB was a niche brand with a reputation for both ruggedness and performance. The brand generated owner loyalty that other makes could only drool over. But with no new cars in the pipeline since June, many present dealers are wondering whether to stay or go. Either way, we wish them well.
SAAB AUTOMOBILE AB FILES FOR VOLUNTARY REORGANIZATION, SAAB AUTOMOBILE PARTS AB AND OVERSEAS SUBSIDIARIES ARE EXCLUDED
Zeewolde, The Netherlands, 7 September 2011 – Swedish Automobile N.V. (Swan) announces that Saab Automobile AB and its subsidiaries Saab Automobile Powertrain AB and Saab Automobile Tools AB (collectively Saab Automobile) will file for voluntary reorganization today at 09:00 CET with the District Court in Vänersborg, Sweden. Swan and Saab Automobile are of the opinion that, considering Saab Automobile’s current limited financial resources, a voluntary reorganization will entail the best preconditions for using existing resources in the most efficient way. The eventual purpose of the proposed voluntary reorganization process is to secure short-term stability while simultaneously attracting additional funding, pending the inflow of the equity contributions of Pang Da and Youngman.
The proposed voluntary reorganization will be a self-managed, legal process under Swedish law headed by an independent administrator appointed by the court who will work closely with the Saab Automobile management team. As part of the process, Saab Automobile has formulated a reorganization plan, which includes a number of aspects aimed at lowering its cost-base and creating a viable, competitive and independent organization. This reorganization plan will be presented to creditors in more detail within three weeks of the filing, although this period could be extended by the court.
Following court approval, the voluntary reorganization will be executed over an initial period of three months. If required, the reorganization period can be extended by another three months, up to a maximum of twelve months. Swan and Saab Automobile are confident that they will secure additional short-term funding for the reorganization period and are currently in negotiations with several parties about obtaining such funding. Funding for Saab Automobile to exit reorganization has been secured through binding agreements with Pang Da and Youngman as announced on July 4, which agreements are, however, subject to obtaining certain approvals.
As part of the reorganization filing, the court-appointed administrator will apply for the Swedish state’s wage guarantee scheme to allow wage payments to all Saab Automobile employees to be made. August salaries are expected to be paid within a short time frame following the court approval. With regards to outstanding debts to creditors, Saab Automobile will seek the support of its creditors for the reorganization process and is confident it will obtain this support, particularly because Saab Automobile aims at full redemption of outstanding debts.
Saab Automobile has proposed that the District Court appoints Swedish lawyer Guy Lofalk as administrator, who also was the administrator in the successful 2009 Saab Automobile reorganization. Victor Muller, CEO of Swan and CEO and Chairman of Saab Automobile, and the Saab Automobile management team will cooperate closely with the administrator to execute the reorganization plan. The voluntary reorganization process will cover Saab Automobile AB, Saab Automobile Powertrain AB and Saab Tools AB. All other entities, including Saab Parts AB and all overseas entities such as Saab Great Britain and Saab Cars North America, are excluded from the reorganization.
The reorganization plan contains a blueprint of how Saab Automobile’s Management expects to improve Saab Automobile’s business model with an emphasis on an independent, lean and competitive organization.
Victor Muller, CEO of Swan and CEO and Chairman of Saab Automobile, said: “While the voluntary reorganization process will no doubt present us with a number of tough issues and decisions, I believe that Saab Automobile will emerge stronger from this process. The potential for Saab Automobile as a viable, independent premium car manufacturer is there, as shown by the rejuvenation of our product portfolio, approximately 11,000 orders and the conditional long-term funding already in place through the binding agreements with Pang Da and Youngman that will give us access to the Chinese market.”
When having your mobile A/C system professionally serviced, insist on proper repair procedures and quality replacement parts. Insist on recovery and recycling so that refrigerant can be reused and not released into the atmosphere.
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