Saab announces preliminary restructuring plan, aiming to turn profitable by 2014
The Swedish court dealing with Saab restructuring announced the investment plan of the concerned Chinese investors on October 31, which shows that Pangda Automobile Trade Co and Zhejiang Youngman Lotus Automobile Co will acquire 100% stake in Saab for 100 million euros, and the successive investment will be as high as 600 million euros. The acquisition must first gain the approval from China’s National Development and Research Commission and the Ministry of Commerce within two weeks, or the deal will fail.
SAAB published its restructuring plan submitted at the meeting of creditors on its official website on November 1st.
According to the plan, the Chinese investors will provide a bridge loan of 50 million euros to Saab to help it go through the restructuring plan. Then they will inject 5.5 billion yuan (610 million euros) into Saab to help it continue to pay off debts, resume production and keep operation during 2012-2013. Besides, the Chinese investors will provide a long-term financing for Saab to help it carry out the previous product lineup expansion plan and the plan of opening plants in China. By now, Saab has not got the loans promised by the Chinese investors. Besides, the 63 million euro installment loans from the European Investment Bank will be released.
Saab is said to lay off 500 employees, about 15% of the total number of its employees. It can reduce structural costs by 1 billion Swedish Crowns ($157 million).
Youngman and Pangda will jointly control Saab Auto Group, with Youngman taking 60% stake in it and Pangda taking 40% stake in it.
In order to enter Chinese market, Saab, Youngman and Pangda are planning to establish two new firms in China: a sales company and a vehicle manufacturing company. The R&D work will be done by the Sweden-based Saab company.
The annual sales of Saab vehicles in 2012 are expected to stay at between 35,000 units and 55,000 units, and the sales are expected to reach between 75,000 units and 85,000 units in 2013. After that, the sales could reach between 185,000 units and 205,000 units in 2016.
The models targeting at the traditional markets and Chinese market will include new 9-5 Sports Combi and new 9-4X crossover unveiled in 2012. Meanwhile, Saab has signed an import deal with Russia and Ukraine.
Saab will shift its focus to Chinese market in future, and Chinese market is expected to contribute one third of its total sales. Currently, European market contributes 64% of its total sales, while North America contributes 30% of its total sales.
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As I was reading another article regarding this news, it apears that China’s National Development and Research Commission try to reduce the number of brands and models on the chinese market, and the manace called GM. I guess that it is too early to count the would be hutched eggs.