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February 14, 2012
Saab hits brakes amid cash crunch
Published: 30 Jun 09 16:45 CET | Double click on a word to get a translation
Online: http://www.thelocal.se/20376/20090630/
Saab Automobile has the capacity to manufacture and sell more cars, but currently lacks the money it needs to do so.
- Saab shares dive despite strong 2011 report (10 Feb 12)
- Saab to cut Swiss Gripen fighter price: report (8 Feb 12)
- Several bids for Saab: administrator (7 Feb 12)
Saab is now attempting to move along its application for a 4.6 billion kronor ($592 million) loan from the European Investment Bank (EIB) in hopes of getting access to the financing sooner than previously planned.
Otherwise, the company may have to wait until after a meeting of the EIB board on September 22nd before it receives the first installment of the loan.
The bank doesn’t hold a board meeting in August, and it’s unlikely that the EIB will have had time to fully review Saab’s application prior to a meeting of the board in July.
“We’re working with the EIB to see if we can move the decision to July. We haven’t ruled it out. If it doesn’t happen, we have the ability to adjust our operations so that our money lasts,” said Jonsson.
Today, a meager 100 cars a day are produced in Saab’s primary plant in Trollhättan in western Sweden, and without more money, production will likely have to remain at that level.
The Swedish state is also an important party in the EIB negotiations, as Sweden is required by the bank to guarantee the loan. Saab is currently negotiating with Sweden’s National Debt Office (Riksgälden) over the conditions for the state guarantees.
But Saab is also talking with the state about a rescue loan, which would provide the company with financing in the short-term.
The Swedish state has previously set aside 5 billion kronor for short-term loans to the country’s vehicles industry, but has yet to use it.
“We’ve discussed it, but haven’t heard anything so far,” Jonsson told the newspaper.
No additional funding is expected from General Motors (GM), Saab’s previous owner, and in the near-term, Saab’s new owners, the Koenigsegg Group, aren’t expected to provide any funding either.
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One of the Koenigsegg investors was at the epicenter of the US sub prime financial crisis. Mark Alan Bishop was President of Quick Loan Funding. How can the government support lending to the people who caused the depression? How can GM sell to slippery people like this?
This will haunt Saab forever.