Saab gets some Chinese money, lives to see another day
This bridge loan of $97 million US dollars was originally announced back in September and while many may ask “who would loan almost $100 million to a company who is about to go bankrupt?”, this loan has been guaranteed by Chinese firm Youngman Lotus. In layman’s terms, this is kind of like your mom and dad signing for your first car…so if you cannot afford to pay for the car they become responsible. In this case, Saab is getting $97 million dollars and if they are unable to pay it back, the debt falls on the shoulders of Youngman Lotus. Reports indicate that this first portion of the loan amounts to roughly $15 million USD with the rest expected in Saab’s bank account by the end of October.
The odds are good that if you are reading this, you are probably aware of Saab’s woes throughout the 2012 calendar year but if you are not – here is a quick rundown. Due to supplier issues that were complicated by labor disputes (all of which were caused by Saab’s inability to pay their creditors and workers), the Swedish automaker hasn’t built a car at their Trollhattan plant since April. On top of that, even though they have managed to find interested investors around the globe the money hasn’t been enough to pay off their many creditors and their unpaid workers, resulting in members from both groups attempting to force Saab into government mandated bankruptcy. Luckily for Saab, right as they were to face bankruptcy hearings brought down by their labor unions, the Swedish government stepped in and granted the company protection from creditors as the company works through a government-assisted restructuring process.
Saab has been relying heavily on the golden parachute that comes in the form of a pair of large investments from Chinese firms Youngman Lotus and Pang Da. The money from these two groups is expected to be more than enough for Saab to pay their creditors, pay their workers and get back to normal business. Unfortunately, China’s communist government has say over matters like this and the Chinese feds have already blocked one group’s attempt to invest in Saab. While Pang Da, Youngman and Saab all appear to be confident that the Chinese government will approve the partnerships; many believe that the approval will never come and without it – Saab will have no way to save themselves from the claws of their creditors and labor unions.
In the meantime, it looks like Saab will soon have the $97 million dollars to help them work through reorganization. Saab has pledged all along that they intend to pay back all of their debt to suppliers and various businesses around the world while the governmental protection program will assist in paying those workers who were previously unpaid. For the moment, it appears as though things might be looking up for Saab but in the drama that has been the Swedish luxury brand in 2011 – things could change at a moment’s notice.
Other Saab News:
Saab's still alive, investment deal with Pang Da and Youngman promising
Swedish Automobiles sells Spyker Cars to US equity firm
Saab looks to cut jobs during restructuring
Saab lives, government protection granted
A third Swedish labor union demanding Saab bankruptcy
Source: Automotive News