Saab’s latest woes appear to have no end in sight with news emerging overnight that the automaker’s owner, Chinese-backed National Electric Vehicle Sweden (NEVS), which itself is facing bankruptcy and currently in administration, is seeking a reduction on some of its debts. NEVS is hopeful of establishing a long-term funding deal and potential joint venture with one of two OEMs, believed to be India’s Mahindra and China’s Dongfeng, but says it needs to exit its current restructuring to do so.
NEVS is currently operating on funds from its own parent, Hong Kong-based National Modern Energy Holdings, but to exit its restructuring it will need to either pay back its creditors or reach a new agreement. The company’s proposal is a 50 percent reduction on debts above 500,000 Swedish Krona (approximately $59,350) for its unsecured creditors. According to NEVS, the debt reduction would affect 104 of its total 573 creditors.
“The negotiations are progressing but we also see the complication of reaching an agreement when we are in a state of reorganization,” NEVS CEO Mattias Bergman said in a statement. “Our main owner has single-handedly financed the reorganization and intends to get us out of it; in order for this to be possible financially, we need to reach a composition arrangement with the creditors.”
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Understandably, those 104 creditors that would be forced to take a haircut under the proposal won’t be happy. However, as administrator Lars Eric Gustafsson warns, the alternative could mean NEVS enters bankruptcy and the creditors still end up with lower funds only years later. A meeting to discuss the proposal will take place on February 26.
Should the creditors agree to the proposal, NEVS remains hopeful one of the OEMs it’s in talks with will form a technical joint venture to share some of Saab’s technology, including its new Phoenix platform. as well as become the new majority holder in NEVS.
Stay tuned for an update.