Since the last piece I wrote about Saab, Saab Turnaround 2011 – The Struggle and the Pain, there have been subsequent machinations in Trollhättan, as the Swedish auto manufacturer tries desperately to live another day in order to facilitate its long-term survival. 

Just to recap regarding the emergence of Saab’s new Chinese partner, and possible saviour, Pang Da: 

After a deal with Chinese SUV-maker Hawtie fell apart, Saab immediately fell into the arms of Pang da, a more well-known Chinese company that is a vehicle distributor in-country. Pang Da currently imports and distributes Toyota, Subaru and Honda brands in China. 

The initial agreement had a commitment by Pang Da to buy Saab vehicles in two tranches. An initial purchase worth 30 million euros has already been agreed to and a subsequent tranch worth 15 million euros is scheduled right behind that, Victor Muller, CEO of Spyker, told journalists in Sweden in May. Muller then added that the first tranch was already on a train, heading for China. 

Pang Da will also take a 24 percent equity stake in Spyker for a total of 65 million euros, or 4.19 euros per share.

So, besides the money, the working premise here was that Pang Da will have no problem getting the necessary approvals from the government to do the deal, AND, since they are already in the business of buying cars from overseas auto manufacturers, subsequently importing those vehicles into China, and successfully reselling the vehicles in-country. Adding Saab to the mix is merely expanding their existing business. Therefore, the logic goes, far fewer approvals will be needed in the first place. Pang Da is a car distributor, not a car manufacturer.

If the deal can get done (and stay done; more on that in a moment), this is more advantageous for Saab, as they get the operating capital they desperately need in order to start their production lines again, they move a lot of iron (by Saab standards, anyway), AND, they get a partner who has the means and the existing infrastructure to support a sales network in China going forward. 

If you add everything up (the unit purchases and the equity stake), Pang Da will invest around 110 million euro in Saab. 

After announcement of the deal, Muller stated that he expected production to start up again within a couple of weeks. Production was halted because Saab’s suppliers refused to make deliveries until they were paid the amounts owed to them in arrears. 

Okay, so what has happened since that time? 

Well, production in Sweden is still stopped. Pang Da (and in a minor role, Chinese company Zhejiang Youngman Lotus Automobile Co.) has not yet been able to invest in Saab because the investment has not yet been approved by various regulatory overseers. The Saab production lines have now been idle for approximately two months. There has also been a new wrinkle added to the production issue, which is that Saab no longer has enough money to pay staff, and the workers’ union was threatening to sue Saab for their past wages, which would certainly push them into bankruptcy proceedings, which certainly adds another layer of complexity to any possible resumption of manufacturing at the Swedish automobile company. 

Just as an aside, it is worth noting that there is one supplier that has not halted shipments to Saab during their capital funding ordeal. It’s a big supplier and they’re delivering a big “component”. That supplier is General Motors and what they provide to Saab is the new 2012 Saab 9-4X crossover vehicle. GM is still producing the Saab crossover for their former subsidiary and taking what amounts to an IOU in lieu of payment. 

Back to the matter at hand, the cash crunch – On Monday, Saab announced that an unnamed Chinese company (that is not Pang Da) signed an order for 582 Saab vehicles and that full payment was expected by the end of Friday (today, July 1). On Tuesday, Saab announced that the company had reached a memorandum of understanding to sell 50.1 percent of the shares in Saab’s real estate holdings to a consortium of Swedish real estate investors led by Hemfosa Fastigheter, a Swedish holding company, in a deal valued at 28 million euros. 

Additionally, Saab has been able to secure two short-term “bridge” loans from Saab shareholder Gemini for a combined 25 million euros. 

Once all of these loans amounts are remitted, Saab hopes to prevail upon the EIB (European Investment Bank) for a loan drawdown of 29.1 million euros, which it will be able to do only after payments to suppliers and employees remove them from default status vis-à-vis the terms of the business credit line. 

But Muller, the CEO, says the employees have been paid everything they’re owed, and Saab’s suppliers have been paid considerable amounts on their balances owed, and production should start up again in (wait for it) two weeks. 

No so fast, says the head of the group representing Saab’s suppliers. A statement from that group states that there is not yet an agreement in place with Saab that will allow supplier shipments to resume on a regular basis. Although the statement also mentions that they don’t want Saab to go bankrupt, and that Saab going bankrupt is in no one’s best interests, that is not exactly a ringing endorsement of the two-week timeframe for resumption of production that Muller claimed. 

Meanwhile, none of this is occurring in a vacuum; Saab is experiencing some level of opportunity cost by not having production going, and so are their dealers. The negativity around the shutdown and the possibility of imminent collapse is also certainly not helping the public perception that Saab is either, 1) out of business, or, 2) going to be out of business shortly.  

And, what is Pang Da’s view of this financial roller coaster called Saab?  

Surprisingly sanguine, actually. 

Pang Da board secretary Wang Yin, says Pang Da has not wavered in it’s commitment to Saab and things are proceeding apace regarding Pang Da’s investment and partnership. Yin stated, “”There’s no change to our previous plan. Saab is having temporary financial difficulties, and the problem isn’t fundamental.” 

Spoken like a true turnaround maven. Stay tuned and keep your seat belts fastened. . .

Brendan Moore is a Principal Consultant with Business Turnaround Specialists, a management consulting practice based in the Washington, DC area, where he advises businesses in rebirth and rejuvenation. Business Turnaround Specialists can be found at