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Saab Has No Shortage of Potential Buyers
Apr06

Saab Has No Shortage of Potential Buyers

By Brendan Moore

04.06.2009

saab-logo1967-1974-small1Some interesting news came out of Saab’s court proceedings in Vanersborg, Sweden this morning.

First, the Swedish court gave Saab an extension for restructuring until May 20, since no creditors of Saab had entered reservations against Saab’s restructuring plan. Saab plans to write off 75% of its non-prioritized debt, and if any of the approximately 1300 creditors that showed up for today’s hearing had objected, Saab would have been pushed into bankruptcy very quickly.

Second, a court-appointed trustee told the court that around 20 companies are interested in bidding for Saab at this point. The chatter in the industry is that at least two of the larger Chinese automakers are interested, as well as several Swedish industrial concerns, and, of course, several other unidentified companies.

All of this activity was initiated by a staggering GM recently stating that they would cut Saab loose by January 1, 2010. This, after 20 years of partnering/ownership – a period which many fans of the Swedish marque feel was disastrous for Saab.

Third, Saab is taking steps now to make their break-even point only 130,000 vehicles produced annually and then subsequently sold worldwide. Saab feels it can be quite profitable at 150,000 units, forecast to happen in 2011.

Saab reckons they need around one billion dollars (USD) of capital financing to stay afloat while they’re losing money and developing new models. They believe they can get $400 million from its former parent, GM, also its biggest creditor, in the form of debt write-offs and production assets it will give to Saab at no cost. The balance of $600 million will come from the European Investment Bank.

COPYRIGHT Techshake – All Rights Reserved

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Hyundai Releases Photo of NuVis Concept
Apr02

Hyundai Releases Photo of NuVis Concept

By Brendan Moore

04.02.2009

hyundai-hcd11-nuvis-sketch3This dropped into my email box yesterday – thought I would share it with you.

Hyundai is unveiling their NuVis Concept next week at the New York Auto Show, and has sent out a very dark, stylized teaser photo of same.

According to Hyundai, “The world will peer into Hyundai’s future when the Nuvis concept makes its world debut at the 2009 New York Auto Show. The Nuvis is the eleventh signature concept car to be designed at the company’s California Design Center in Irvine, Calif. In addition to showcasing the brand’s cutting-edge capabilities, Nuvis also hints at a possible design direction for a future-generation crossover, blending attributes of a tall urban car and a premium utility vehicle.”

Well, we’ll see what it looks like in the metal next week at the show.

COPYRIGHT Techshake – All Rights Reserved

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Fiat Will Dictate Terms To Chrysler
Mar31

Fiat Will Dictate Terms To Chrysler

By Brendan Moore

03.31.2009

chrysler-logo-small1If you’re on the Chrysler acquisition project team (sorry, “partnership” team) at Fiat, you must be feeling pretty good right about now. Because whatever valuation you arrived at for Chrysler last month just got halved, courtesy of the United States government.

The Obama administration has publicly stated that if Chrysler doesn’t do a deal within 30 days, then they cease to exist. So, if you’re Fiat, you have to figure that Chrysler is going to sell  a big piece of itself for whatever price is acceptable to you, the buyer. It’s not like they have a lot of time to negotiate, and besides, if there is no sale, then they will go away forever. Chrysler is now what is called a motivated seller (partner).

If nothing else, it should cut the time allocated to due diligence and discovery by Fiat down to a very small amount of time.

I’m not saying it’s a done deal – Fiat may decide a big chunk of Chrysler isn’t worth buying even at 50% of the valuation they arrived at a month ago. Frankly, they could reach that same decision at 25% of last month’s valuation, considering all of Chrysler’s debts and liabilities, and, the massive re-jiggering the company will need. Remember, this is a company that Cerberus got for free a couple of years ago, before a deep recession and the recent movement to frugality (read: less Chrysler trucks and SUVs going over the curb) by United States citizens.

It’s quite possible that Fiat may even wait for Chrysler to go into bankruptcy, and then bid on only the assets they want, cafeteria-style. Then they wouldn’t have to do the shut-down of production lines themselves. Of course, they would then run the risk of losing the Jeep brand and the truck line to someone else that was also bidding piecemeal, and, bidding higher.

One thing’s for certain – if Fiat buys a controlling stake in Chrysler, it will be at a price they dictate. Chrysler has no other potential buyers (“partners”) at this point and does not have the option of holding out for a higher price later.

What an ignominious end for what used to be a great company. A long time ago, admittedly, but nonetheless, they used to be somebody.

COPYRIGHT Techshake – All Rights Reserved

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Obama Gives GM and Chrysler Some Tough Love
Mar30

Obama Gives GM and Chrysler Some Tough Love

By Brendan Moore

03.30.2009

gm-logo-small1In a remarkable 24 hours, the Obama administration has forced out Rick Wagoner as CEO of General Motors, and publicly rebuked both Chrysler and GM for the inadequacy of their restructuring plans. They have also put forth their conditions for more federal aid to the two automakers and stated that bankruptcy is still an option for both Chrysler and GM.

Along the way, the Auto Task Force that was recently brought into existence by the Obama administration stated in direct language that Chrysler was absolutely not viable as a stand-along entity and that if they couldn’t get a merger done with Fiat in the next 30 days (with working capital from the US Treasury during those 30 days), that the company would get no more money from the federal government and go under.

The Auto Task Force concluded that General Motors had far more promise as a stand-alone company, but that their restructuring efforts to this point were not anywhere strong enough to get the job done. GM has been given working capital for 60 days to wring out more concessions from the unions and their stakeholders, cut more costs, change production capacity, etc.

chrysler-logo-smallPresident Obama has stated repeatedly that he would not let the United States auto industry just disappear, that he wants the companies to succeed and prosper, but that there is no blank check from the government towards that end. It is obvious that the Obama administration wants to keep the many jobs that the auto industry and it’s supplier base provides, but since they are providing the money to keep the staggering automakers afloat, they want to control the terms and conditions as to how the money is metered out and spent. There is also the issue of growing public resentment towards all bailouts, regardless of the industry.

In addition, the Obama administration today announced many other steps to assist the auto industry, including tax credits, new government task forces, greater availability of consumer credit and other measures.

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Peugeot-Citroën Fires Their CEO
Mar29

Peugeot-Citroën Fires Their CEO

By Brendan Moore

03.29.2009

peugeot-logoPSA Peugeot Citroen, the second-largest auto manufacturer in Europe, fired their CEO, Christian Streiff, in a surprise move today.

Streiff was replaced by Philippe Varin, CEO of the Anglo-Dutch steel company Corus. Varin will take over on June 1.

Streiff arrived at Peugeot in 2006 from Airbus, where he had been CEO for only 100 days before his ouster.

Peugeot just notched a $460 million USD loss last month, and at the same time announced that they expect to post further losses until at least 2010.

Chairman Thierry Peugeot, of the Peugeot family (25% ownership of PSA) said in a statement, “The board unanimously judged that the exceptional difficulties faced by the auto industry imposed a change of management. I am convinced that under Philippe Varin’s leadership, the PSA Peugeot Citroen group will be able … to reveal all its potential.”

Streiff was lambasted in the French press for announcing 3000 layoffs right after the French government gave the company three billion euros. He also caught a lot of heat from the government and the media for importing Peugeots manufactured in the Czech Republic for sale in France. Additionally, he was hospitalized from the end of May until July, leading some industry analysts to question the condition of his health.

Nonetheless, Streiff quickly defended his tenure at Peugeot after his firing, saying that policies he had put into place at Peugeot had left the company well-prepared to cope with the economic downturn. He mentioned that under his leadership, Peugeot had introduced popular new models, initiated cost-cutting and effective inventory controls. “The economic and financial community hailed these results. Thus I cannot understand the board’s decision,” he added.

But Streiff’s opinion matters for nothing in this process; instead the important opinion is the one the board holds, and the board lost confidence in him, and just like a lot of other senior auto industry executives, Streiff has lost his job in this unforgiving market environment.

Board member Roland Vardanega will take on the role of interim CEO from now until Varin steps in, a Peugeot spokesman stated.

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