Saab’s future looks bleak as investors change tune

Saab Automobile has been banking on investors recently to help avoid collapse of the company, and at the beginning it looked like they had found what they needed with two Chinese investors. Unfortunately for Saab, it looks like the investors backed out at the last second.

Reports came in recently that Pang Da Automobile Trade Co. and Zhejiang Youngman Lotus Automobile offered to invest $338 million to help save the company, but the two companies changed their tune, instead offering to purchase a 53.9% stake in Saab parent company Swedish Automobile NV. The company refused the deal.

“If the Chinese are not prepared to pay a reasonable value for it, the shareholders and creditors are better to let it wind up,” said Howard Wheeldon, a senior strategist at Bgc Partners LP in London. “So much damage has been made to the brand anyway these last six months, and it wasn’t doing well before it imploded. The end is now definitely nigh.”

Last month, Saab managed to narrowly avoid bankruptcy after a Swedish court offered the company voluntary reorganization. However, attorney Guy Lofalk told Saab that he would apply with a Swedish court to terminate the restructuring, Business Week reports.

Saab and parent company Swedish Automobile got some form of respite recently thanks to a funding pledge from North Street Capital, an American private-equity firm. According to Swedish Automobile, the firm offered to lend $60 million to help save Saab. They’re also said to be interested in buying 2.39 million new shares in Swedish Automobile at $4.19 per share.

A court date of October 31 has been set to determine whether or not Saab will be able to continue with reorganization efforts.

Sources: Business Week, NY Times