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November 1, 2011 12:59 PM

Magic Circle Firms in Driver's Seat for Saab Sell-Off

Posted by Brian Baxter

Allen & Overy and Linklaters are advising on the $142 million bankruptcy sale of Sweden's Saab Automobile to a pair of Chinese carmakers.

Saab filed for bankruptcy in Vänersborg District Court in early September after failing to secure the financing needed to continue operations. An infusion of money had seemed possible over the summer when the struggling automaker signed an agreement with two Chinese investors--Zhejian Youngman Lotus Automobile and Pang Da Automobile--but the funds that were to flow as a result of the pact didn't materialize in time for Saab to restart its operations. The Trollhättan-based automaker temporarily suspended production in June while it sought additional investors.

Now both Zhejiang Youngman and Pang Da are stepping up to save Saab from liquidation. Linklaters M&A partners Peter Goes in Amsterdam, M&A partner Elisabet Lundgren in Stockholm, and M&A partner Simon Poh in Shanghai are serving as counsel to Pang Da on the agreement. Chinese firm Zhonglun W&D Law Firm and M&A partners Paul Cronheim and Martin van Olffen from Dutch firm De Brauw Blackstone Westbroek in Amsterdam are advising Zhejiang Youngman.

The Saab deal echoes one hatched last year by another Chinese automaker, Zhejiang Geely Holding, which saved rival Swedish automaker Volvo by purchasing it for $1.8 billion from parent Ford Motor Company. (Freshfields Bruckhaus Deringer and Hogan Lovells landed roles on that deal, according to our previous reports.)

Saab first filed for bankruptcy in Sweden in February 2009 as former parent General Motors coped with mounting financial difficulties fueled, in part, by the 2008 economic crisis. (GM bought a 50 percent stake in Saab in 1990 and took full control of the carmaker a decade later.)

Guy Lofalk, a former partner at now-defunct Coudert Brothers and founder of Swedish bankruptcy boutique Lofalk Advokatbyrå, was appointed by the Swedish bankruptcy court to serve as Saab's administrator. In June 2009, Sweden's Koenigsegg Group tapped Skadden, Arps, Slate, Meagher & Flom to serve as counsel on a bid to buy Saab out of bankruptcy, according to our previous reports.

Saab emerged from bankruptcy in August 2009, but Koenigsegg backed away from a deal to acquire the company three months later. In January 2010, Dutch automaker Spyker Cars took the lead in the race to buy Saab, offering to pay $400 million in a transactions that saw Allen & Overy and Swedish firm Cederquist advising Saab, according to our previous reports. Spyker, based in Zeewolde, Netherlands, was subsequently renamed Swedish Automobile.

Allen & Overy partner Victo Ho in Shanghai and Beijing has been acting as outside counsel to Swedish Automobile on its negotiations with Zhejiang Youngman and Pang Da on their investments in Saab. Ho told The Daily Deal in July that Chinese companies, including the country's fledgling automakers, are aggressively taking part in auctions for assets around the world.

Saab's general counsel is Kristina Geers, who was also a member of the company's board of directors until stepping down from that post in June. Victor Muller, the CEO of Swedish Automobile and the sole remaining member of Saab's board, is a former Baker & McKenzie lawyer who founded Spyker Cars in 2000.

Saab's new Chinese buyers have vowed to provide long-term financing for the company, and Reuters reports that they will pump at least $709 million into Saab with an eye toward making new cars in China and Sweden. Lofalk, who was also appointed as the Saab administrator when the carmaker filed for bankruptcy again in Sweden this year, said that the deal with Chinese investors could allow Saab to be profitable again by 2014.

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