Thursday, June 23, 2011


Saab said on Thursday it had no money to pay staff, compounding a crisis at the Swedish carmaker which has halted production because of debts to suppliers.
Swedish Automobile has been struggling to solve a cash crunch since April, vindicating critics who said it was too small to turn around Saab when it bought the firm in 2010 after 20 loss-making years under previous parent GM .
Swedish Automobile, whose shares had plunged 45 percent to 1.35 euros by 1356 GMT, said it was in talks with various parties including current financiers over various options, including a sale and leaseback of Saab's factory.
"There can, however, be no assurance these discussions will be successful or that the necessary funding will be obtained," it said in a statement.
Production at Saab was halted for most of April and May and will be hit again for at least the next week because there is no money to pay suppliers for parts.
Swedish Automobile this month agreed a rescue package for Saab from two Chinese car companies, Zhejiang Youngman Lotus Automobile Co and Pangda .
Saab also got a cash injection from the sale of cars to Pangda but it has yet to keep production rolling.
Analyst Martin Crum at Dutch brokerage AEK said bankruptcy was possible for Saab.
"The company is in a downward spiral. The longer it takes, the tougher it gets. The longer it takes, the more potential buyers will leave," he said.
The IF Metall and Unionen groups at Saab said they would formally demand payment on Monday if workers had not received wages by then.
"Then the company has seven days to react," IF Metall representative Veli-Pekka Saikkala told Reuters.
"After that there are two alternatives. Either we see that the situation can be solved, or we demand that Saab is put into bankruptcy."
Swedish Industry Minister Maud Olofsson ruled out help from the state, which is already guaranteeing a 400 million euro EIB loan to Saab.
The company filed for bankruptcy protection in early 2009 after GM said it would cut ties with the brand.
Swedish Automobile, then named Spyker, bought Saab for $400 million in January 2010. Spyker had never made a profit since it was founded in 2000.
Last year, Saab fell well short of its first-year sales targets, leading to the escalating cash crisis.
"It remains to be seen whether the company can pull off a deal to raise short-term liquidity," IHS automotive analyst Ian Fletcher said in a note. "If it cannot, the future for Saab looks extremely bleak to say the least."
Saab spokeswoman Gunilla Gustavs said it was not possible to say when salaries would be paid.
"That depends on when and if we can secure short-term funding, for example through the real estate deal."
"This is really bad news, and we are working intensely to do something about it. There are no guarantees, but we are not giving up," she said.
"There's no talk of laying off employees."
Earlier this week Saab made a payment offer to suppliers in an effort to get production going again.
The chairman of Sweden's association of car industry suppliers Christer Palm said many suppliers seemed willing to accept a payment of 10 percent of outstanding debt at the restart of production as a first step toward full repayment.