Saab Files For Bankruptcy Again: Who's Going To Save It This Time?

August 29, 2014

The long saga of Saab beggars belief. With all the ups and downs and reinventions, it plays like a so-so season of Doctor Who: observers either find it so ludicrous that they stop caring, or they become devoted, passionate fans.

Today's unlikely plot twist is no less absurd. Because as our colleagues at Motor Authority point out, for the second time in two years, Saab is slouching toward bankruptcy court .

The writers at Univision would have a hard time dreaming this up.

DEJA VU

If you haven't been TIVOing the Saab story, this handy recap will bring you up to about mid-2012. Since then:

  • Saab was rescued from its last visit to bankruptcy court at the 11th hour by a group called National Electric Vehicle Sweden AB (NEVS) -- which, just to complicate matters, consisted of investors from China (National Modern Energy Holdings Ltd) and Japan (Sun Investments).
  • NEVS' goal was to relaunch the brand as an electric car company, with sales of 120,000 units per year by 2016.
  • That's unlikely to happen because Sun Investments bailed on NEVS, leaving China's National Modern Energy Holdings holding the bag and the bills, which haven't been paid since at least May.
  • National Modern has been in talks with other investors, but so far, nothing's worked out. Earlier this month, one of NEVS' suppliers that hadn't been paid asked a Swedish court to force NEVS into bankruptcy and liquidate its assets.
  • NEVS begged the supplier to withdraw that request and promised that it was working hard to fix the problem.

LATEST DEVELOPMENTS

Despite NEVS assurances, its hard work to fix the problem hasn't panned out. Over the past few weeks, NEVS has had zero luck in securing additional investors, so it's now done a 180 on the whole bankruptcy thing and walked right into court itself. NEVS application for restructuring was approved by a Swedish judge today.

NEVS plan is to create a new company that will own Saab's still-in-development Phoenix platform. NEVS will then sell half of the new company to one of the two potential investors interested in Saab (investors that NEVS has been negotiating with for months). NEVS believes that funds generated from the sale of that subsidiary will be enough to pay off most of NEVS' debts.

Like many of NEVS' projections, that could be a tad optimistic. NEVS has posted losses of around $86.1 million; it owes National Modern Energy $163.4 million; and its debt to suppliers and other external creditors totals some $57.3 million. Which adds up to a pretty spicy Swedish meatball -- especially for a company that's failed to produce many real cars.

Worse -- for NEVS at least -- the as-yet-unnamed investors know they have NEVS over a barrel. NEVS needs them more than they need NEVS, which gives them a serious advantage at the negotiating table.

Our take? Many of us love the Saab brand and the quirky cars it produced for decades. But it's pretty clear that either (a) NEVS has been too optimistic about the challenges Saab faces and didn't lay enough groundwork to ensure the company's success, or (b) NEVS doesn't know how to run a business in capitalist economies. Or as the kid says in the commercial, ""Por que no los dos?"

We'll keep you posted about Saab's progress, but the next time you're at Walgreens, grab a sympathy card, just to be safe. 

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