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Saab Story: A Bailout -- and Russian Moolah -- Looms for the Quirky Automaker

Last Updated Apr 14, 2011 2:31 PM EDT

Iconic Swedish carmaker Saab has its back against the wall -- again! Last year, General Motors (GM) sold it to a Dutch supercar manufacturer, Spyker. Now Spyker has hit a cash crunch and been forced to suspend production until it can pay some angry suppliers. There's talk of a second quasi-bankruptcy in as many years. And Russian rescue money continues to wait in the wings.

Kind of makes the heart beat faster, doesn't it? Well, it does if you care about Saab, an always idiosyncratic car company that, under Spyker's ownership, was poised to recover much of the Saab-ness that GM forced out. There are two critical issues at the moment:
  1. Can Spyker devise a way to enable Vladimir Antonov, a Russian financier of dubious repute, to bring to the table the money he has wanted to bringsince last year, when GM vetoed his participation and made giving up his stake in Spyker a precondition of the Saab deal?
  2. Will Sweden decide that Saab is worth keeping around?
The Antonov piece of the puzzle has taken on a convoluted quality. He says he'll give Saab more than $70 million, but obviously he wants an ownership stake. At the moment, Saab is attempting to obtain Swedish government approval for Antonov to take over the company's real estate assets, which would bring in around $361 million. Antonov also controls banks that could provide additional liquidity to Saab.

Unfortunately, Antonov just doesn't have the money to save Saab on his own. Reuters has produced a comprehensive rundown of the assorted options available to keep Saab afloat, including a fire sale to the Chinese. One of China's automakers, Geely, already owns the other iconic Swedish brand, Volvo, having purchased it from Ford (F) after the financial crisis.

The buying frenzy in the auto industry has subsided
A lot of sheet metal changed hands after the Detroit meltdown. Fiat took a chunk of Chrysler. Ford jettisoned Volvo, Jaguar, and Land Rover. GM killed Saturn and Pontiac, sold Hummer, and unloaded Saab.

But the selling season is over and that it's unlikely a big carmaker, in China or anywhere else, will take over Saab from Spyker. Fiat has been mentioned as a potential buyer, but CEO Sergio Marchionne is currently neck-deep in refinancing Chrysler's remaining $7 billion debt obligations to the U.S. and Canadian governments.

China also shouldn't be in a buying mood right now as its auto market is showing some temporary weakness. This really leaves just Antonov and Sweden and whatever other investors may be lurking out there who consider Saab to be worth more than its currently meager $100 million market value.

Staving off the inevitable
My guess is that Sweden will figure out a way to allow Antonov back in, which will extract Saab from its current cash bind. But that move won't solve the bigger problem of keeping the automaker afloat for the next few years until it can refresh it limited product lineup and transform itself into a sort of Swedish Porsche.

This means that a state-financed restructuring is on the horizon, not matter how the Antonov matter shakes down. This sounds dire, but it really isn't that big a deal. The legacy of the financial crisis, both in the U.S. and Europe, is that "bailout capitalism" is all part of the New Normal. The state needs rich people to run businesses, and rich people need the state to underwrite the risk.

So the only thing standing in the way of the Antonov solution is lingering Cold War paranoia about aging Western automotive technology getting into Russian hands. It will, but seriously -- do you think Russia wants to build its domestic auto industry by reverse engineering the whole thing from... Saab?

Related: Photo: Matthew DeBord