Saab still struggling after Spyker salvation

When the going get’s tough, the tough get going. In 2010, the Swedish car manufacturing company Saab experienced its annus horriblus. After 64 years, the then owner General Motors wanted to eliminate the Saab production. Out of the blue came a Dutch entrepreneur and owner of Spyker Cars NV; Victor Muller. He made a deal with General Motors and saved the Saab factory. But, just as life, business is not a bed of roses: the sales of Saab automobiles lag behind on predictions and a multi-million euro loss again threatens the continuation of Saab, JOEP DERKSEN reports. Meanwhile, the management does not forget to reward itself for the salvation of Saab.

Not many people can loose 218 million euro in one year and are still entitled to receiving a 500,000 euro bonus. Victor Muller, CEO of sports car maker Spyker did just that and on top of that he received a 550,000 euro ‘management fee’ as well as 120,000 Spyker shares. To his defence, Muller does not earn a salary and he has been rewarded for his role in the Spyker-takeover of the Swedish car manufacturer Saab.

An impossible achievement, many people thought: ‘How can a small, luxurious sports car manufacturing, company purchase the world-renowned Saab-enterprise from General Motors?’ Muller did just that and won the praise of not only all Saab-workers but also the entire Swedish population. According to the press release issued by Spyker, Muller earned his bonus(es) since he reached 40% of his targets. For that reason, Muller’s right hand man Hans Go, could also pick up 20.000 shares of Spyker. Also the commissionaires now seem to want extra benefits; among them Hans Hugenholtz and Maurizio La Noce. They are said to claim, respectively, 95,000 and 62,000 euro.

Remarkable

It is quite remarkable, since the loss of 218 million euro comes with a turnover of only 819.2 million euro. This makes the loss per share 12.69 euro, since the net debt of the enterprise was already 177.4 million euro. In 2010, Spyker only sold 31.696 cars to wholesalers. Though it is 15% higher than the year before, it still is lagging behind the targets set. Spyker/Saab expects to sell 80,000 cars in 2011 and 120,000 in 2012. According to Muller, Spyker’s results will be break even when 80,000 cars are sold in one year’s time.

The shareholders association VEB has questioned the €500,000 bonus paid to Victor Muller. Since the announcement of the Muller-bonuses, news reports have been talking about serious threats to the continuation of the Saab factory. Production has been stopped several times, due to the fact that suppliers stopped sending the raw material to Saab. These companies first wanted to be paid for previous deliveries. This led to heavy criticism from Lars Holmqvist, director of Clepa; a European organisation representing 3,000 suppliers for the car industry. He said: ‘It will be incredibly difficult for Victor Muller to solve the problems with Saab. They seem to be getting out of control.’

Christer Palm, chairman of FKG, the Swedish representative organisation of suppliers, agreed: ‘It cannot continue like this: ceasing production, continuing production and ceasing production. Nobody will benefit.’ Currently Muller is said to be negotiating with banks to obtain an additional loans of around 500 million euro. The Spyker director still seems to have a trump card, however. His former business partner Vladimir Antonov may want to invest a multimillion euro amount in Saab. The cash is urgently needed, can be read from the Spyker annual report. Without extra capital, the continuation of the 64-year old Saab and even the mother company Spyker, will be uncertain, the accountant company Ernst & Young warns.

No worries

The Saab Automobile Press Office claims that there is no need to worry. ‘After a short production stop at Saab Automobile, production re-started again. Certain suppliers halted supplies to Saab Automobile pending discussions about payments and supply terms. Saab Automobile expects to resolve these issues in the short term, also to prevent any further disruptions in supply. Saab Automobile has sufficient means to meet its immediate liquidity needs from existing and available sources. In addition, Saab Automobile continues to work on longer term solutions to further strengthen its financial position and improve its capital structure.’

Nevertheless, in March Pieter Heerema resigned ‘for personal reasons’ from the Board of Commissionaires of Spyker NV. Heerema had previously invested 25 million dollar to Spyker. A new financial top advisor Nils-Johan Andersson was expected to join the company, but unexpectedly he declined – for personal reasons. On 25 March Saab-director Jan Ake Jonsson announced his retirement, which will take effect after the 19 May shareholders meeting.

Jonsson’s departure did not make matters worse, however. The Swedish government announced on April 15 that it agrees with the sale of Saab Properties. This separate Saab-enterprise is taking care of all real estate properties owned by Saab. The sale of Saab Properties is expected to generate at least 30 million euro; money which can be used to pay the suppliers. Share holders and investors were relieved to hear the news from the Swedish government. For the time being, Spyker Cars can continue its operations and production in the Saab-factory will not be stopped. Monday 18 April, the share price went up 6% to 4.18 euro.

Published in "The Holland Times".