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Saab’s property sales cover only two months wages so how can the company get more money to start production



  

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Thursday, 07 July 2011
The sale of Saab’s real estate is aimed at raising money for the cash strapped company so as to pay suppliers and workers. But Skr 255 million which the company will receive after the Swedish government's  approval of the transaction will pay worker only for two months.

Swedish motor analysts feel that as Saab is not currently building and selling cars, the capital is being eaten up and the current investment from the property buyers will only leader to a two months pay cheque to the workers.

On Thursday morning,  finally came the announcement that the Swedish government has approved the sale of Saab's factory property. This means that Skr255 million could soon reach the empty pocket of the automaker.

Saab's debts is, however big and Skr255 million is no big sum in the context.
"It secures two months' salary payments by payroll and taxes. Therefore it is something that goes between the thumb and forefinger. So July and August  will be done and again the money will be finish, "says Mikael Wickelgren, lecturer in business economics at the University of Sk�vde in Sweden who also focused on the automotive sector, speaking to the Swedish business daily Dagens Industri.

For that Saab start producing cars again, paying workers only will not be enough. The sub contractors have to be taken car of.  Already IAC has submitted requirements for Saab to pay Skr44 million, excluding arrears estimated to be hundreds of millions. Various sources estimate the debts of the company to be between Skr600 and Skr800 million.

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Mikael Wickelgren could not speculate whether the approved deal would trigger production start. But as at now the factory is still closed.
"It's about getting more money. The Skr255 million is not enough for everything. Then they need new capital, which they of course are trying to organize. This is not a situation where only process is running without other pieces intact, "he says.

He points out that, in addition to the transaction, there are several agreements that are being trying to get realized, referring to the Chinese partner agreements, but also a change in ownership structure in which Vladimir Antonov would be welcome to become a shareholder.

Last Friday, it was announced that a new Saab convertible bond signed with the finance company Gemini investment became a reality. Altogether, Saab would have secured Skr606 million in the last week. Then there also money from a car orders from an unnamed Chinese company that will be included.

When half of Saab's real estate was sold, there was a decrease in the company’s Debt securities. The Swedish Debt Office is the guarantor for Saab's loan with the EIB and the facility limit is reduced by Skr1.1 billion. This means that Saab can borrow an additional Skr584 million, in addition to the more than Skr2 billion already borrowed from the EIB.

As at now, Saab's production will not begin before the holiday recess according to news reports. No earlier than August 8, will Saab start building cars again even though it has stopped production continuously for four months.
By Scancomark.se Team


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