Saab Automobile owner Swedish Automobile NV said Wednesday it secured a EUR25 million bridge loan from Gemini Investment Fund, a Bahamas-based hedge fund, allowing it to restart production in the next two weeks.
With the convertible bridge loan, the sale of real estate and an order for cars from a Chinese buyer, Saab Automobile this week has secured EUR66 million in additional funding.
"We have clearly gone through a very rough patch in the past few weeks and hopefully we can now reach agreement with our suppliers so as to ensure a resumption of our production in a controlled way," Saab Automobile and Swedish Automobile boss Victor Muller said in a statement.
Production at Saab Automobile has been halted for most of the past three months due to unpaid supplier bills. Last week Saab Automobile announced that it didn't have enough money to pay its employees' wages, and it approached its suppliers with an offer to pay just 10% of their outstanding accounts in an attempt to resume production.
Swedish Automobile, formerly Spyker Cars NV, has been in talks with several parties about securing additional funding, but hasn't yet got the necessary clearance from regulators and stakeholders to complete a deal.
It has agreed to sell stakes totalling more than 50% to Chinese companies Zhejiang Youngman Lotus Automobile Co. Ltd. and Pang Da Automobile Trade Co. Ltd. (601258.SH). But those investments are awaiting rubber stamps from Swedish and Chinese authorities, which could take months still, and Saab Automobile's problems are more immediate.
The latest financing deal comes just days after Russian financier Vladimir Antonov wrote to Swedish Minister of Enterprise Maud Olofsson pleading for Saab Automobile's future as the government considers a request to allow him to take a stake in the troubled car maker.
With short-term funding seemingly in place, it now is imperative that Saab Automobile should resume output as soon as possible, although summer vacations could be an obstacle.
Saab Automobile, which has outstanding orders of about 7,500 cars, this month reached an agreement with its workers to shorten their summer vacations from four weeks to two starting July 25 to allow it to reduce that backlog if and when production resumes, but that deal will be meaningless unless suppliers can get their employees to make similar concessions so that they can produce the parts that are needed.
"If we don't get the material, we can't produce," said Hakan Skott, head of the IF Metall union at Saab Automobile.
Lear Corp.(LEA), whose Trollhattan plant delivers seats to Saab Automobile with only a few hours notice, currently is negotiating vacations with its staff, but discussions have been hampered by the short notice, according to Johan Andersson, head of Lear's Swedish operations.
"I have never experienced such short notice before," he said. "Many of our employees have already booked travels."
Leif Hakansson, ombudsman at the regional section of IF Metall covering Trollhattan, said that three of the major Saab Automobile suppliers in his sector had started negotiations over summer vacations, all of them completely dependent on the troubled car maker.
"At one place negotiations went smoothly, but at the others we are not yet done," he said.
The main issues in the negotiations are whether the workers should be compensated with money or with time off and also when they could take their rescheduled vacations.
Saab Automobile's employees will, as compensation for the shortened vacation, be paid a maximum amount of 20,000 Swedish kronor ($3,145) by June next year.
Meanwhile, in a letter, dated June 22, Antonov expressed concern over the fact that Olofsson was quitting as leader for the Center party, a move that could entail her stepping down as minister of enterprise as well.
He said he believed Olofsson to be the best guarantee that Saab Automobile would receive the political and moral support it needed to ride out the storm as she had followed and supported the company for several years.
"I see it as a challenge that someone else will attempt to take over your duties in the autumn--if it is not already too late by then," he said.
Erik Bratthall, Olofsson's press secretary, said Wednesday that it was a "nice letter" and that it would receive a reply shortly. He didn't wish to speculate on the content of that reply.
The Swedish National Debt Office, which manages the state-backed guarantees for Saab's loans in the European Investment Bank, said in April that it saw no reason to deny Antonov ownership in Swedish Automobile, but the Swedish government has said that it would wait for a decision from the EIB before making its own opinion known.
Antonov has close ties to Saab Automobile's parent. He was a major shareholder in Spyker Cars NV, as Swedish Automobile previously was known, but was forced to sell his stake by General Motors Co. (GM) last year as a condition of its sale of Saab Automobile to Spyker.
-By Christina Zander, Dow Jones Newswires; +46-8-5451-3104; christina.zander@dowjones.com
