** update 10 December 14: 05 CET **
Despite the flurry of (mostly positive) news bits from the past week or so, the Vänersborg District Court still hasn't taken a decision on whether or not the reorganization phase can continue as NEVS requested on December 1st. The decision is expected on Thursday 11 December and the key lies not only in whether the court recons that there is a viable approach forward, but also whether there is an agreement with the creditors. So far, 14 of 64 creditors have confirmed their position to the court and they aren't all positive.
Mahindra saves the day
The actual application for extension of the reorganization was filed a week ago on Monday. It more or less reads as a summary of the original reorganization plan (ie with still “Plan A” and “Plan B” as options mentioned), with two main differences. The first and key one that has drawn most media attention already: on Sunday 30 November a Letter Of Intent (LOI) was signed by “a major OEM player” for an upcoming direct investment in NEVS. This OEM -now through one of the suppliers formally confirmed as Mahindra- is to become majority owner and will ensure the completion of NEVS 'business plan and continued in-house car production in Trollhättan. If anything, this confirmation of the signed LOI was the critical missing bit to prevent the court from declining the extension request immediately, so I suppose Mahindra saved the day.
As reported earlier, suppliers were requested by Administrator Lars-Eric Gustafsson to write down up to 50% of their outstanding claims with NEVS. The other difference from December 1st was that contrary to what was written in the letters from the week before, Gustafsson now says that “creditors with a claim below a certain amount are paid in full, and that creditors with claims in excess of such amount receive payment of a certain percentage on the excessed amount ”. So more individual suppliers likely to be in agreement, while the ones with the larger claims are the harder nuts to crack, in particular as NEVS essentially says that there is no actual detailed proposal yet (ie no set thresholds or percentages). Either way, trust in NEVS is being severely compromised as promises of “full payments” are now likely being broken.
So the creditors are asked to agree just in principle so that the court will approve the prolongation of the reorganization and as soon as they say yes (technically, creditors holding 60% + of the total claim amount have to back it), the actual negotiations can take place.
So far, 14 of the 64 creditors have confirmed their position to the court. While some have specific reservations (eg concerns about the rights to continue to use the SAAB brand name, but also criticism against the requested write down of the claims and the associated perceived violation of trust), they are predominantly positive. Earlier reports also confirmed that the creditors committee consisting of representatives from the Swedish tax office, Leannova Engineering, Orio, Hewlett Packard, Plastal and labor unions IF Metall and Unionen was positive. Interestingly, LeanNova (one of the largest creditors with a claim of over-the-counter XKNXXM) now wrote to the court that they are against the proposed settlement. What are they means are the extension of the reorganization is as such is unlikely.
And Svea Ekonomi really doesn't want to play
On Wednesday morning the news broke that credit, financing and collections company Svea Ekonomi is in fact against a prolonged reorganization under the current conditions. In the letter they sent to the Vänersborg court they state that they have insufficient belief in NEVS 'proposed financing as long as there is no legally binding contract where a new investor (read: Mahindra) is taking over the accountability for running the business.
Decision time Thursday?
The deadline for the creditors to report back to the court was on the 9th and I'm expecting a decision latest by the end of the week as the three judges responsible for the case are convening on Wednesday. The fact that Svea Ekonomi (with claims of around SEK 33M) has now expressed their disapproval means that the court needs to take more time to come to a conclusion.
However, assuming the extension is granted, a great deal of work still needs to be done. If anything, to actually get the letter of Intent turned into a legally binding contract. Supposedly, the Mahindra board will take such a decision by the end of this month but this may need to be sooner ...