Saab unable to afford to pay employees
Swedish Automobile, previously known as Saab Automobile and Spyker Cars, has announced it is unable to afford to pay wages to its employees due to the recent cash shortages and production stops the company has had to put in place. The company is developing plans with a range of parties to try to help raise the necessary funds.
Production at the company's plant in Trollhaettan, Sweden, first stopped in April due to a recent insufficiency in funds to pay its suppliers. Thanks to a deal made with Pang Da in China, production recommenced on May 27. As of June 8, production stopped once again.
Analyst at Amsterdams Effectenkantoor BV, Martin Crum, said in a recent Bloomberg report,
"The company is still not able to produce cars; that’s the main concern. If you don’t sell cars, you don’t get cash in."
One of the options being presented by Swedish Automobile to help raise money is the sale and lease-back of the production plant in Trollhattan. However, Mr Crum says that the sale could "provide some badly needed liquidity for the short term, but for the longer term they of course need more".
According to reports, Saab is currently in a debt of around $45 million to parts suppliers, but this week, the company has proposed to the suppliers a payment of 10 percent now and the rest in September. This would relieve some stress on cash flow, and may help in the effort to pay wages.
Swedish Automobile has said it will provide further updates as soon as possible. We'll keep you posted.
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