February 27, 2021

DealBook: Court Denies Saab Protection From Creditors

The Saab 94X on display in Stockholm.Linus Hook/Bloomberg NewsThe Saab 94X on display in Stockholm.

6:06 p.m. | Updated

Taking a bleak view of Saab Automobile’s prospects for recovery, a Swedish court on Thursday rejected the troubled carmaker’s application for protection from creditors. The decision sharply narrows its room for maneuvering and pushes it a step closer to financial collapse.

Saab employees have not been paid for August, and the company’s unions had been considering legal action that could have forced the company into liquidation when the bid for protection from creditors was announced on Wednesday.

Saab’s unions had given guarded support to bankruptcy protection, partly because the government would have been asked to guarantee workers’ salaries. But with its prospects dwindling, unions may feel they have no choice but to press on with their legal action.

Saab and two subsidiaries had petitioned the District Court in Vänersborg, Sweden, on Wednesday for “voluntary reorganization,” a move to gain time for Chinese partners to come through with long-term financing and prevent the legal challenge from unions.

But the court was not convinced by the plans.

Noting that Saab had just undergone a restructuring in 2009, when it was owned by General Motors, “the court did not see sufficient reason to believe that the chances were any better today than they were then,” said Cecilia Tisell, a court spokeswoman.

The court also found that the financing plans of Saab’s parent, Swedish Automobile, relying as they did on Chinese companies that had not yet received Beijing’s approval, were not concrete enough, Ms. Tisell said.

A further consideration, she added, was that Saab’s production lines completely stopped operating in June, and the court believed that even if production resumed, it might be difficult for the company to begin selling cars again.

“Saab Automobile is disappointed with the ruling,” the company said in a statement, adding that it would appeal the decision and disclose “further developments” on Friday.

One of Saab’s unions will decide within a few days whether to ask that Saab be declared bankrupt, said Leif Hakansson, a spokesman for the IF Metall North Älvsborg union.

“We regret that Saab Automobile is not going to get the time it needs until the funding from Pang Da and Youngman arrives,” he said in a statement.

Formerly known as Spyker Cars, Swedish Automobile, based in Zeewolde, the Netherlands, bought Saab from General Motors in 2010. Attracted by Saab’s loyal customers, Spyker’s entrepreneurial chief executive, Victor Muller, bet he could turn the company around where G.M. had failed.

But the company has never been able to sort out its finances, and production suffered after suppliers began cutting off credit in March.

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DealBook: PNC Is Said to Be Near $3.45 Billion Deal for R.B.C. Unit

6:01 p.m. | Updated The PNC Financial Services Group is near a deal to buy the Royal Bank of Canada’s American consumer banking operations for about $3.45 billion in cash and stock, people briefed on the matter said on Sunday.

The transaction, which would allow R.B.C. to shed a division that has been hobbled by the housing crisis, could be announced as soon as Monday, these people said. They cautioned that final details were still being ironed out and that the deal could still fall apart.

PNC beat out a rival, the BBT Corporation, in a race for the unit, RBC Bank, the people briefed on the matter said.

R.B.C. purchased Centura Banks in 2001 for nearly $2.2 billion, beginning a push into American retail banking. But the unit, renamed RBC Bank after a series of acquisitions, has failed to win significant market share.

RBC Bank was buffeted by the housing crisis, losing money for several consecutive years. It took a $1 billion write-down in 2009, leading to a reorganization that included eliminating jobs and reducing lending.

By contrast, PNC has performed well since the financial crisis. It has reported three consecutive increases in annual profit, earning $3.4 billion in 2010. Its last major deal was buying the National City Corporation in 2009 for about $4 billion.

Through the deal, PNC is hoping to expand into the Southeast, an area in which the bank currently has relatively little presence. RBC Bank currently has more than 420 locations in six Southern states, from Virginia to Florida.

While R.B.C. is pulling back from retail banking in the United States, it still has significant operations in the country, including an investment banking arm.

Other Canadian competitors, however, have made big pushes into American consumer lending over the last year. The BMO Group agreed in December to buy Marshall Ilsley, based in Milwaukee, for $4.1 billion.

That same month, Toronto-Dominion struck a $6.3 billion deal for Chrysler Financial, the former lending arm of the eponymous car maker.

R.B.C. is only the latest bank to sell a major unit under pressure. Last week, the ING Group agreed to sell its American online banking arm to Capital One Financial for $9 billion as part of the requirements of its bailout by the Dutch government.

Shares in R.B.C. rose 1.2 percent, closing at 54.33 Canadian dollars on Friday, after Bloomberg News reported that PNC had won the auction.
Shares of PNC fell 2.8 percent, to $57.79, on Friday.

R.B.C. was advised by JPMorgan Chase, while PNC was advised by Bank of America Merrill Lynch.

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Nokia to Cut 7,000 Jobs in Cost-Cutting Move

BERLIN — Nokia, the world’s leading cellphone maker, said Wednesday that it would slash about 7,000 jobs as part of a cost-cutting program that is deeper than expected.

The 12 percent reduction in the Finnish company’s global work force will help trim operating costs by €1 billion, or $1.47 billion, a 17 percent reduction, by the end of 2012. Analysts had expected job cuts of between 5,000 and 6,000.

Stephen Elop, the former Microsoft executive who became Nokia chief executive in September, said the cuts and reorganization were needed to prepare Nokia for its partnership with Microsoft. Nokia plans to eventually phase out the Symbian operating system as it rolls out smartphones next year running Microsoft Windows Phone software.

“With this new focus, we also will face reductions in our work force,” Mr. Elop said. “This is a difficult reality, and we are working closely with our employees and partners to identify long-term re-employment programs.”

In a statement, Nokia said the reductions would be achieved by eliminating 4,000 jobs, mostly in Britain, Denmark and Finland, and by transferring 3,000 employees responsible for its Symbian operating system to Accenture, a global technology consultant to businesses.

The company, which is based in Espoo, Finland, employed 59,080 in its cellphone business at the end of 2010. The figure excludes staff at Nokia Siemens Networks, its network joint venture, and at Navteq, a U.S. mapping data company it also owns.

Nokia produced 108.5 million mobile phones last year, supplying 32 percent of the global market, but the company this year ceded the lead in cellphone revenue to Apple, the maker of the iPhone, according to Strategy Analytics, a research firm.

In addition to the job cuts, which will become official following negotiations with labor representatives, Nokia said it planned to consolidate its research and development division so that each site has a clear role and mission. Nokia has mobile phone RD sites in Finland, China, India, Germany, England, Denmark and San Diego.

Some sites will grow, others will contract and some will be closed as a result of the reorganization, Nokia said, without providing further details.

“This move was largely anticipated and follows Nokia’s need to reduce its cost structure,” said Michael Schroder, an analyst at FIM Bank, a private bank in Helsinki.

Nokia’s failure to capitalize on the smartphone boom has cost the Finnish company market share and prestige as the center of gravity in its industry has shifted from hardware and communications to software and applications.

That boom is still going strong, said Ericsson, the global leader in wireless network equipment, on Wednesday, as it reported that demand for mobile broadband lifted its own sales by 17 percent in the first quarter from a year earlier to 53 billion Swedish kroner, or $8.7 billion.

Profit at Ericsson, based in Stockholm, more than tripled to 4.1 billion kroner from 1.3 billion kroner a year earlier, which the company attributed to cost-cutting and greater profitability in its networks business.

Most of the demand came from the United States and Canada, Ericsson said, where wireless operators like Verizon Wireless, ATT and Rogers Communications are expanding the capacity of their 3G networks and installing new, even faster, networks based on a technology called Long-Term Evolution to handle rising traffic.

Ericsson said the level of data traffic on the world’s global mobile networks doubled in 2010 from 2009 and will continue to double each year for the next few years.

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