A partially assembled Saab sits on the line in Trollhattan. The plant has been shuttered since late March.
Cash-starved Saab Automobile is close to landing a $157 million bank loan that could help it steer clear of bankruptcy, according to reports.
The deal, if completed, would provide enough cash to cover current salaries, pay off angry suppliers who’ve been threatening to force the carmaker into foreclosure and possibly even get the maker’s headquarters assembly plant, in Trollhattan, Sweden, running again for the first time since suppliers began boycotting Saab in late March. But as with a variety of other rescue efforts, it is taking longer than expected to lock down the billion-kronor loan.
Saab’s situation has been steadily deteriorating since then despite the maker inking a variety of deals – including one with China’s largest auto distribution network, Pangda – which were supposed to raise the cash necessary to cover its bills. One deal collapsed soon after it was announced, while most of the others have run into a miasma of regulatory delays that have kept much-needed cash out of Saab’s corporate coffers.
But in a surprise move, parent Swedish Automobile says it has suspended plans to sell its Spyker sports car subsidiary to the Russian banking tycoon Vladimir Antonov. The $46 million deal was intended to raise cash and permit the company to focus on its larger, Swedish-based business.
The sale could go ahead later, however, Saab spokesman Eric Geers telling the Associated Press that, in light of “the focus on Saab, the project is at this point on hold and will be taken on once (the) Saab business is stabilized.” But he suggested an alternative to selling Spyker to Antonov could be considered.
Antonov was a former partner of Victor Muller, Chairman of Swedish Automobile and the founder of Spyker. The Russian businessman was forced out before General Motors agreed to sell Saab to Spyker in early 2010. The company has since changed its name to Swedish Automobile.
News of a possible bank rescue echoed well with investors, the company’s shares reaching 74 Euro cents at the closing bell on Friday, up 5 cents. That’s a fraction of the 3.06 Euro 52-week high but significantly better than the stock’s 0.43 Euro low. And the rise came despite word that the maker’s losses significantly worsened during the latest quarter.
For the first half of 2011, the company has gone 202 million Euros into the red compared with a loss of 21.9 million Euros during the first six months of 2010. A major problem is the Trollhattan plant shutdown. With no cars rolling out there’s little to sell other than the Saab 9-4X crossovers the maker recently introduced. Those vehicles are produced at a GM plant in Mexico.
“Right now, the focus of Saab management is on working as hard as possible to bring the company back into calmer waters by significantly strengthening our financial position, reaching agreement with all our suppliers on payment and delivery terms and restarting production as soon as possible,” said Chairman and CEO Muller. “We are evaluating all available options in order to secure continuity of Saab Automobile.”
Specifics of the bank loan under negotiation have not yet been revealed but a report in the Detroit Free Press suggested it would come from “one of the five-biggest European banks.” There had been some indications the loan would be approved as early as Thursday, but as the business week wound down in Europe there was no formal word of approval nor any explanation of the apparent delay.
If approved, the loan would not preclude Saab from continuing to seek out other funding options, including the alliance with Pangda, as well as another partnership with Chinese automaker Zhejiang Youngman Lotus Automobile Co. But it could take some of the pressure off while Swedish Automobile waits for regulatory approval.
Those two firms are planning to submit the necessary paperwork to the National Development and Reform Commission this month.
“We’re optimistic about the deal getting approval from NDRC as we believe it is in line with government policies,” Wang Yin, Pangda’s board secretary, said Thursday, referring to the top Chinese economic planning agency.