Saab gets cash from Chinese suitor
BY RON HAMMERTON | 17th Oct 2011
Saab said the undisclosed sum – reported by Swedish newspaper Dagens Industrito be $US15 million ($14.57m) – was expected to be followed by further payments before October 22 under its $US70 million ($A68m) bridging loan agreements with Youngman as Saab fights to stave off bankruptcy under Swedish court protection.
European reports say Saab needed the money to pay wages under Sweden’s state wage guarantee – a crucial part of the restructuring process.
The efforts to salvage the company will be in vain, however, without the approval of the Chinese government for plans by Youngman and major motor vehicle distributor Pang Da Automobile to buy into Saab in a deal worth a combined €245 million ($A329m).
Saab and its parent company, Swedish Automobile NV (SWAN), said approval had been received from Chinese authorities at local and district levels, leaving the decision by the National Development and Reform Commission (NDRC) the only government stumbling block from the Chinese end.
The company said the bridging loan from Youngman – full name Zhejiang Youngman Lotus Automobile – would be repaid from the equity investments by Youngman and Pang Da which “are still subject to approval by relevant authorities and parties which SWAN expects to receive during the next weeks”.
An announcement by Chinese authorities had been expected on Friday, but Saab said that rumour was based on a misinterpretation by Saab of court documents.
“The fact that we didn’t receive any decision from the NDRC today (Friday) has no bearing on the decision process in its entirety and is not something from which we should draw any conclusions,” Saab said, adding that it was not possible for third parties to know when the NDRC would take its decision.
Saab shut production at its Trollhattan plant in April when suppliers stopped delivery of components due to non-payment of debts that reportedly stand at more than €150 million.
The issue came to a head in August when Saab could not pay workers’ salaries and it was forced to apply for court-protected voluntary reorganisation.
The initial application was denied, but Saab appealed, fielding a number of documents such as letters from Youngman and Pang Da to support the reorganisation, including details of the Youngman bridging loan.
The appeal was successful on September 22, buying Saab breathing space to get the Chinese deal in place.
Just a week after two unions applied to have Saab declared bankrupt on September 12 – the day Saab submitted its appeal – the company said “headcount reductions” could not be ruled out as it tried to improve efficiencies.
Saab has a workforce of 3700 in Sweden, mainly at its Trollhattan factory and headquarters.
It also has an arrangement with former parent General Motors to source its new 9-4X SUV from GM’s Mexican plant.
