Saab secures more funds as talks with suppliers continue

ERJ staff report (AN)

Stockholm, Sweden -- Swedish Automobile said it signed a second loan deal with a shareholder that would secure more short-term funding for its cash-strapped carmaker Saab.

The Swedish automaker has been scrambling to raise cash since April when unpaid suppliers stopped deliveries, forcing it to halt Saab production. Last week it said it could not pay workers.

Wednesday's deal is Saab's third lifeline this week, but Swedish Automobile said in a statement the plant would remain idle until a deal is reached with suppliers.

The firm said it had secured a 25 million euro ($35.4 million) loan from shareholder Gemini Investment Fund, following a 30-million euro loan deal with the fund last month.

On Monday, an undisclosed Chinese firm ordered 582 cars for 13 million euros and agreed to pay this week, covering Saab's wage bill and some unpaid debts to suppliers. On Tuesday, Saab signed a conditional 28 million euro deal to sell and lease back plants and other property.

"Assuming the receipt of these funds as scheduled, Saab Automobile expects to have secured the liquidity required to restart production, hopefully within two weeks, subject to reaching agreement with its suppliers which includes feasible delivery schedules," Swedish Automobile said.

But the FKG group representing Scandinavian suppliers to the car industry struck a cautious note.

"It is not yet all set for production to start up and I don't think it will be after this news," FKG Chief Executive Svenake Berglie said. "This is another piece of the puzzle."

Berglie said talks between Saab and suppliers remain sluggish but suppliers believe they have nothing to win from a Saab bankruptcy.

Swedish Automobile also said on Wednesday that it had paid June salaries from the proceeds of Monday's deal.

The six-month, 25 million euro convertible bridge loan from Bahamas-based Gemini has an interest rate of 10 percent per year and a conversion price of 1.38 euro per share.

Saab hopes to complete a loan drawdown of 29.1 million euros from the European Investment Bank (EIB) once it has received the money, and once it has reached a deal with its suppliers on payment terms for outstanding debt, it said.

Saab has been unprofitable for the past two decades and Swedish Automobile, which recently changed its name from Spyker, has never made a profit.

From Automotive News (A Crain publication)