Chinese firms reveal Saab profit ambitions
AFP/The Local · 31 Oct 2011, 16:18
Published: 31 Oct 2011 11:56 GMT+01:00
Updated: 31 Oct 2011 16:18 GMT+01:00
According to a preliminary business plan filed with the Vänersborg district court in southwestern Sweden and presented to Saab's creditors Monday, Chinese companies Pang Da and Youngman intend to supply €610 million ($855 million) in long-term funding to Saab.
Saab, which revealed last week that the two firms had offered to buy it for €100 million from its Dutch owner Swedish Automobile (Swan), would also immediately receive €50 million in bridge financing and would tap a European Investment Bank credit for another €63 million, the court filing showed.
The funding is intended to prop up Saab, which halted production six months ago as suppliers stopped deliveries due to mountains of unpaid bills and which is currently restructuring under bankruptcy protection, until it can begin on the long road to recovery.
"The financing is set to meet Saab's future financing needs," Pang Da chief executive Pang Quinghua told reporters in Stockholm through an interpreter.
The creditors at Monday's meeting did not have any initial objections to the plan, which is widely seen as Saab's last chance at survival, and the court decided not to halt its reorganisation.
The creditor's meeting on Monday will examine the plan, which is widely seen as Saab's last chance at survival.
According to the plan presented Monday, the company will start production again next year, making between 35,000 and 55,000 cars, and by 2014 it will be turning a profit.
By 2016 Saab is expected to be pushing out up to 200,000 cars a year, the plan showed, adding that the carmaker's biggest growth market will be in China, which is expected to account for a third of its global sales.
Returning Saab to profit will meanwhile entail cutting costs by one billion kronor (€111 million, $155 million), according to the plan.
Saab itself, which currently counts around 3,700 employees, said in a statement that the cost-cutting plan would include slashing 500 jobs.
The court filing meanwhile showed that Saab would continue producing cars at its Trollhaettan factory in southwestern Sweden, but that Saab cars would also be made in China going forward.
Saab has previously said it had about €220 million in unpaid bills to suppliers, but the speedily assembled business plan did not show how creditors would be repaid.
Saab's court-appointed administrator Guy Lofalk said that part of the plan would be presented soon.
While the court and creditor approval of Saab's continued restructuring was good news for the car maker, it was too early to declare its woes over.
The Youngman-Pang Da buy-out still requires approval from a long line of interested parties, including Chinese authorities, the European Investment Bank, the Swedish debt office and Saab's former owner General Motors.
The latter is expected to be the most difficult to get on board, due to among other things, concerns over its technology going to China.
Swan's charismatic chief executive Victor Muller, who in recent months has presented one plan after another in his bid to save Saab, said late last week he thought all the stamps of approval would be secured within a few weeks.
Swan, formerly known as Spyker, rescued Saab from the brink of bankruptcy early last year when it bought the company from GM for $400 million.