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Saab to pay staff after new China order

TT/AFP/The Local · 27 Jun 2011, 14:40

Published: 27 Jun 2011 14:40 GMT+02:00

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The cash-strapped firm expects to receive the money for the order by the end of the week.

"A Chinese company placed an order to purchase 582 Saab vehicles with a total value of €13 million ($18 million)... the full pre-payment is expected to be received this week, providing Saab Automobile with short-term funding to pay the wages to its employees and make partial supplier payments," Swedish Automobile, a Dutch company formerly known as Spyker, said.

It did not identify the Chinese buyer.

The parent company and Saab were continuing "discussions with several parties to secure additional short-term funding to restart production," Swedish Automobile said.

"There can, however, be no assurance that these discussions will be successful or that additional short-term funding will be obtained," it warned.

Gunilla Gustavs at Saab's information department told the TT news agency that paying salaries was among the company's top priorities.

"First and foremost this means that we are going to pay staff salaries for June," she said.

Gustavs explained that the money will be paid out on Thursday. She was however unwilling to confirm the name of the Chinese firm.

"We don't have permission to reveal that at the moment. I don't know why, it is part of the agreement."

Gustavs was neither willing to comment on whether it is a company with which Saab has previously conducted business.

"This is an important step in the right direction, we are taking one step at a time and this is really important. The next step will be to reach an agreement with our suppliers over deliveries of components because we have to get production going again," she said.

The announcement was welcomed positively by markets and Swedish Automobile's shares bounced 27.51 percent to €1.23 on the Amsterdam stock exchange at 08am GMT.

Swedish Automobile announced on Thursday that Saab had run out of cash and did not have enough money to pay its staff.

About 1,500 blue collar workers set to receive were immediately affected, with the rest of the firm's 3,700 staff to follow suit.

Two union representatives and a legal advisor left Saab's board at the weekend following the announcement, leaving Swedish Automobile head Victor Muller as the sole member of Saab's board.

"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," he said in Monday's statement.

"I respect the decision of the union members to resign from the board of Saab Automobile," he added.

"We very much regret the current cash shortage which is causing undeserved hardship to all and we are working relentlessly to resolve the current situation."

Muller also said Russian financier Vladimir Antonov, a former Spyker shareholder who repeatedly said he wanted to invest in Saab, was still interested in participating in the company.

Antonov still needs to be approved by the European Investment Bank (EIB), which loaned money to Saab, and by the carmaker's former owner General Motors.

Sweden's national debt office (NDO), which has a say in Saab's ownership structure because it guaranteed the EIB's 400-million euro ($580-million) loan, recommended "to clear him over 8 weeks ago," Swedish Automobile said.

"Once clearance has been obtained, Mr. Antonov can provide much needed financing and/or capital to Swedish Automobile/Saab Automobile at this critical time. We are pushing hard to obtain this vital clearance as soon as practically possible," the company said.

Iconic Swedish brand Saab was saved at the last minute at the beginning of 2010 when it was bought by small Dutch firm Spyker from US giant GM.

In its 20 years as a GM brand, Saab never turned a profit.

Story continues below…

The new owner had big ambitions for Saab but the carmaker has since then lurched from one cash crisis to another.

Earlier this month Saab announced it was entering a partnership with two Chinese businesses -- car distributor Pang Da and manufacturer Zhejiang Youngman Lotus Automobile -- which was to generate investment of €245 million ($350 million).

A previous deal with a Chinese firm fell through.

In Monday's statement Victor Muller expressed understanding for the recent decision by his fellow board members to resign their positions.

According to the Swedish Companies Registration Office (Bolagsverket), Muller has the formal right to continue running the company, despite the boardroom exodus.

Saab Automobile decided at its AGM on June 10th that the board should consist of Muller as the only standing member with Martin Larsson named as sole deputy.

The board was completed by four employee representatives, all of whom have now resigned their posts.

TT/AFP/The Local (news@thelocal.se)

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Your comments about this article

11:05 June 27, 2011 by Twiceshy
Something's very wrong when an order of 582 vehicles is news.
13:23 June 27, 2011 by djmarko
once again Chinese to the rescue, is this the new world order or Saab simply make bad cars?? seems more manufacturing jobs are going to China due to low costs, something the west cannot compete with at the moment!!!
13:38 June 27, 2011 by izbz
@dj marko

Just u remember that the chinese people were treated badly when they first came to the western world to look for better life outside China.

Of course now they want to help their country investing outside. Why not creating more jobs in China???? They worked in coal mines,tin mines and gold mines centuries ago and even if they do buy up Saab in the future at least those who have not gotten their pay check will be paid by the company.

So u people out there do not look down and oppress any other nationality, white ,black or yellow skin. U might need there help in the future
17:06 June 27, 2011 by Keith #5083

Well said!

Also, Saab's ability to keep finding ways to survive is really something worthy of admiration. Good Luck to them, I hope they manage to recover from this trough in their history.
01:53 June 28, 2011 by maxse
Sell Saab like Volvo. Hope some company can buy up Saab, it's really embarassed for cash crisis.
09:05 June 28, 2011 by Molnboman
Right, so their selling the "Family Silver" and waiting on this Chinese order to keep things floating......doesn't sound promising does it? I love Saabs but wouldn't buy a 95 @ 500,000 sek! Biggest issue as far as I can see is that they don't have cars people want to buy at a decent price....clearly, the 95 Saloon was already designed and signed off by GM when the stuff hit the fan, however, they should have thought about producing an affordable Golf / Astra / Audi A3 sized car if they want to sell volumes and generate a bit of cash. They are not a BMW or Audi and the brand doesn't have the cache or depth of models to turn heads and change minds. Look at Volvo....good model range C30 small to Antique dealer sized V70.Lastly, if everyone loves Saab so much and want it to survive..... why do they drive Audis and Beemers?
10:16 June 28, 2011 by DAVID T
I wouldn't pay cash up front to em - It's just a matter of time before the whole factory is shipped off to China - who wants to pay Swedish wages for a crap car
10:35 June 28, 2011 by byke
I don't think they are starting up the factory to make this latest order, more so just have a car lot full of saabs they can't shift, and this order just pays for cars and pretty much guarantee they get sent.
16:43 July 1, 2011 by Icarusty
To the Chinese: we don't like your government, your people, your language or your companies in our country - but we do like your money, exploiting your endless low wage labour, your cheap goods and setting up western brands in China to exploit the Chinese market.

19:03 July 13, 2011 by heyhere407
@ Icarusty

You just telling people how YOU think about China not the rest of us. You alone can not represent all swedes. Please do yourself a favour minding the usage of pronoun.
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