Saab asks creditors to accept 10% now, 90% in September
Saab has spent much of this year dealing with a serious cash flow issue that has not allowed them to pay their suppliers and things have gotten so bad that the company cannot get enough components to build vehicles. Last week, 48 of the companies owed money by Saab and parent company Swedish Automobiles (formerly Spyker Cars) filed with a Swedish collection agency to collect more than $3.6 million US and in the worst case scenario, Saab could be forced into bankruptcy. However, Saab’s recent request to the suppliers and other creditors would have Saab paying all of them 10% of what they are owed right away and the other 90% would be paid in September of this year.
In addition to Saab asking their creditors to accept just 10% now, the automaker sent a letter to around 800 suppliers around the world asking that the company be permitted to pay cash when components are delivered – or shortly after. It is pretty clear right now that most suppliers aren’t going to be willing to deliver components needed for production on credit so Saab hopes to pay cash, but the letter to these 800 companies requests that they be able to pay for their supplies ”5 or 6 days”. Based on that, it sounds like Saab is still requesting parts on credit – even if only for a short time – so it will be interesting to see if enough suppliers are willing to accept this deal to allow Saab to begin building cars in Trollhattan. Saab has also asked that these 800 companies reply by the end of business today.
Saab is putting a great deal of hope in these two requests but for the Swedish automaker to get back to work building cars, the key is suppliers agreeing to Saab paying for deliveries 5-6 days after receiving the parts. Saab claims that they have gotten their hands on some cash thanks to their recently announced partnerships with Chinese firms Pang Da and Zhejiang Youngman and this could be the cash that they hope to use in the immediate future to pay for supplier deliveries. However, if the companies currently taking Saab to collection for millions of dollars do not accept the 10% now, 90% in September, Saab could be forced to use the money from the Chinese firms to handle things with the collection agency. If that is the case, the future could be very dim for Saab.
The other cash infusion that Saab could be expecting would come from the sale of their Trollhattan production facility. The company hopes to sell the plant to someone else and then lease it back. This deal was originally cooked up for Russian investor Vladimir Antonov but now reports have suggested that Swedish property company Hemfosa could be the group to buy the plant and lease it back to Saab. In any case, with Saab asking that the 800 companies contacted reply sometime today and the plant sale expected late this week – we could have a good look at the future of Saab by the end of this week.