Saab receives salvation in the form of cash from Chinese firm
Saab and parent company SWAN have been struggling since April to gather enough cash to pay a variety of unpaid creditors, suppliers and employees in any way that they could. Along the way, the money that they have raised through investment deals and the sale of their Trollhattan plant has helped but it has never been enough to reach a point where they were financially stable enough to get production underway. Through the 2011 calendar year, things have gotten progressively worse for Saab and every time it appeared as though the company found a permanent lifeline to pull them out of their financial crisis - some variable has kept them from completing the deal.
All through Saab’s troubles, the company has been banking on the fact that they inked a memorandum of understanding with two Chinese firms - one being Youngman Lotus - but speculation that the Chinese government would not let those deals happen has prevented Saab from collecting on those investment agreements. At one point, the deal was in such doubt that Saab attempted to cancel the memorandums of understanding with Youngman (and the other firm Pang Da) after the Chinese firms made a low-ball buyout offer. The uncertainty of that deal caused the Swedish government’s administrator in charge of overseeing Saab’s government-aided restructuring process to request that the government pulls their protection - leaving the automaker wide open to a barrage of bankruptcy claims from suppliers, employees and other various creditors. Once that protection is removed, Saab would also certainly be forced out of business with no way to pay off their mountains of debt.
However, it appears that Youngman has been undeterred by all of these hang-ups and financial issues as the Chinese company has given Saab $5 million USD to cover the current tax payments owed to various governing bodies. Reports indicate that Youngman will transfer another $26.43 million into Saab’s bank account on December 14th to pay off all of the company’s unpaid labor expenses while another $13.18 million is planned to reach Saab by the end of the 2011 calendar year. That means that between now and the end of the year, Youngman Lotus will have contributed $44.61 million to the failing Swedish automaker. It is unclear whether this huge chunk of cash is a portion of the buyout cost for Youngman or whether this money is another loan to help keep the company alive long enough for Youngman to buy the company.
Unfortunately, $45 mil isn’t enough to pay off all of the debt that Saab has incurred over the last 9 months of inactivity so there will have to be more help from Chinese investors. Also unfortunately, Saab still owes the European Investment Bank hundreds of millions and even if the Chinese firms are able to get completely on board with Saab, fighting against the will of former owner General Motors - there is still a long road ahead of Saab on their road to profitability. Thanks to Youngman Lotus, it appears as though Saab has finally received enough cash from a Chinese firm to keep the company afloat…for now.
Other Saab News:
Saab sold to Chinese companies Pang Da and Youngman
Saab chooses to cancel $340mil investment deal with Chinese firms
Saab receives a multi-million lifeline from the United States
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