Saab Auto Can’t Pay Wages as Funds Dry Up With Plant Shut
Saab Automobile, the Swedish carmaker that halted production because of a cash shortage, won’t be able to pay wages to employees because it lacks sufficient short-term funding.
Saab and Zeewolde, Netherlands-based owner Swedish Automobile NV are in talks with various parties to raise cash, the company said today in a statement. The options include the sale and lease-back of the factory in Trollhaettan, Sweden.
“There can however be no assurance that these discussions will be successful or that the necessary funding will be obtained,” said Swedish Automobile, which was previously known as Spyker Cars NV.
Saab first halted production in April amid a payment dispute with suppliers. It restarted assembly May 27 after getting a cash advance from Chinese car dealer Pangda Automobile Trade Co., only to put the brakes on manufacturing again on June 8. Saab, which General Motors Co. (GM) sold in February 2010 to Spyker, ran into a cash shortage after missing sales targets.
‘Slim’ Prospects
Saab’s chances are “slim,” said Martin Crum, an analyst at Amsterdams Effectenkantoor BV. “The company is still not able to produce cars; that’s the main concern. If you don’t sell cars, you don’t get cash in.”
The pending property sale “can provide some badly needed liquidity for the short term, but for the longer term they of course need more,” Crum said.
Swedish Automobile fell as much as 23 percent, or 56 cents, to 1.92 euros and was down 14 percent at 11:43 a.m. in Amsterdam. The stock, which declined today to the lowest price since Jan. 21, 2010, has dropped 39 percent this year, valuing the company at 45 million euros ($64 million).
Saab is estimated to owe at least 300 million kronor ($47 million) to Swedish suppliers, according to the country’s auto- supplier association FKG. Saab asked parts makers this week to accept 10 percent of what they’re owed now and the rest in September, as it works to restart production.
Eric Geers, a spokesman for Saab, said the sale of the factory and some office buildings could be completed as early as today, adding that Saab isn’t planning to file for bankruptcy.
Property Buyer
Saab will raise about 300 million kronor from the sale of the real estate to a group led by Swedish real estate firm Hemfosa Fastigheter AB, said Lars Carlstrom, a spokesman for Russian banker Vladimir Antonov, who originally wanted to buy the property. Saab had to find a new buyer after the European Investment Bank, a Saab creditor, didn’t approve a transaction with Antonov.
Geers declined to comment on the details of the pending sale. Jens Engwall, Hemfosa’s chief executive, didn’t immediately return a phone message seeking comment.
Saab is continuing negotiations with suppliers in order to resume an “orderly inflow” of components, Swedish Automobile said today.
In addition to the factory sale, Saab hopes that the European Investment Bank, the European Union’s lending arm, will clear a 29 million-euro payout to Saab “within a few weeks” under a previously approved 400 million-euro financing agreement, Geers said on June 21.
Saab was nearly a casualty of GM’s brand shedding after its government-backed bankruptcy, when it closed Saturn, Hummer, and Pontiac. The Swedish unit was slated to shut down after a group led by Koenigsegg Automotive AB pulled out of talks in November 2009. Spyker made a bid after GM had already begun to wind down Saab, eventually paying $74 million in cash and $326 million in preferred shares.
To contact the reporter on this story: Ola Kinnander in Stockholm at okinnander@bloomberg.net
To contact the editor responsible for this story: Chad Thomas at cthomas16@bloomberg.net
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