Lifeline for Saab as carmaker wins Chinese order

By @ibtimes on

Swedish Automobile , the parent company of ailing carmaker Saab, was given a glimmer of hope after winning an order for new cars that will enable it to pay wages and suppliers and resume production.

Saab is scrambling for funds after saying last week it did not have enough money to pay staff, compounding a crisis at the Swedish carmaker which has been idle for two months since unpaid suppliers stopped delivering parts.

Swedish Automobile, until recently called Spyker, said an undisclosed Chinese company had ordered 582 Saabs for 13 million euros ($18.4 million), and that full pre-payment was expected this week.

I am pleased to announce this agreement as it secures part of the necessary short-term funding for Saab Automobile and allows us to pay our employees' wages before the end of this month, Chief Executive Victor Muller said in a statement.

Swedish Automobile shares opened up 40.8 percent on Monday in Amsterdam and by 0840 GMT were up 24.5 percent. Last Thursday, the shares dropped 60 percent on news that staff would not be paid on Friday.

Saab's troubles intensified last week when Swedish trade unions threatened to force it into bankruptcy proceedings over unpaid wages, and as two union representatives resigned from the board.

Annette Hellgren, a representative at the union group Unionen, welcomed the announcement of the Chinese car order.

This is really good news for all employees, Hellgren said. We hope to have a declaration from the company about how the (cash) injection will affect all employees during the day.

CEO Muller added the company hopes to secure additional short-term funding to reach agreement with all its suppliers so it can restart production.

The next focus is to get production back running, and for that we need to come to an agreement with all of our suppliers, Saab spokeswoman Gunilla Gustavs said.

The firm said Russian businessman Vladimir Antonov was still interested in investing in it, but was awaiting a decision from the European Investment Bank on his clearance for an equity stake in Swedish Automobile, following the Swedish National Debt office recommendation to clear him two months ago.

(Reporting by Roberta B. Cowan. Editing by Jane Merriman and David Hulmes)

Join the Discussion