Saab secures another $35 million loan, production could begin soon
This newest loan to Saab comes from Gemini Investment Fund, a Bahamas-based hedge fund, and with this latest infusion of 229 million Swedish Krona ($35.4 million USD or 25 million Euros), Saab hopes that they can resume production at their Trollhattan production facility within the next two weeks. Even though Saab has acquired some 603 million Swedish Krona in the past three days, the automaker plans to keep production halted until a longer term deal can be worked out with their suppliers. It has been speculated that Saab owes the various creditors between 300 and 500 Krona ($47- 79 million USD), so with this third major transaction this week, the company should have enough money to settle the majority of their outstanding debt.
The terms of the 119 million Krona loan from Gemini Investment include an interest rate of 10 percent per year and a conversion price of 1.38 euro per share. This means that should Saab default on this loan, Gemini could be entitled to roughly 18,115,942 shares of Saab if the full amount was to be converted into a stake in the company. In the meantime, Saab now should have just about enough money to pay their workers, pay their creditors for past-due bills and still have some money left over to begin paying for supply deliveries needed to resume production. However, Saab plans to wait until they have settled everything out with their new investors, the European Investment Bank (EIB) and their long, long list of angry creditors.
Saab sent out a letter to over 800 suppliers around the world early last week asking that those who are owned money accept 10% now and 90% in September. Saab also asked that as the company moves forward, suppliers are willing to make deliveries and allow the automaker to pay cash within five days of the shipment being received. Right now, that sounds like Saab is asking for more short term credit and if suppliers are not willing to allow this – Saab may have to go back to the drawing board to figure out how to best get back to building cars.
Automotive News points out that Saab has not been profitable in the last two decades and parent company Spyker (now known as Swedish Automobiles) has never been profitable in their existence. Looking at it that way, it certainly makes Saab a risky investment.