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Saab to pay staff after new China order

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Saab to pay staff after new China order
14:40 CEST+02:00
A Chinese firm has ordered 582 cars from the crisis-hit Swedish car maker Saab in an order worth around €13 million ($18 million) to the firm.

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.

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.

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