Saab asks suppliers to accept 10% debt payment now, rest later
STOCKHOLM -- Saab Automobile, which has been forced to halt production because of a cash shortage, has asked its suppliers to accept 10 percent of what they're owed now and the rest in September, the chairman of Swedish auto-supplier association FKG said.
"I think most Swedish suppliers will accept Saab's proposal," Christer Palm said in a telephone interview on Tuesday. "Saab's survival is at stake here."
Saab's letter to its approximately 800 suppliers also proposes that the carmaker pays them "cash on delivery" for future shipments, about five to six days after components arrive at the factory in the city of Trollhaettan, Palm said. Saab has asked partsmakers to respond to the proposal by the end of today, he said.
Saab first halted production in April amid a payment dispute with suppliers. It restarted assembly May 27 after getting a cash advance from Pangda Automobile Trade Co., only to put the brakes on manufacturing again on June 8. Saab, which General Motors Co. sold in February 2010 to Spyker Cars NV, ran into a cash shortage after missing sales targets.
Saab is estimated to owe at least 300 million kronor ($47 million) to Swedish suppliers, Palm said.
Eric Geers, a Saab spokesman, declined to comment on the payment terms being discussed or the size of its debts. Saab aims to restart production during the week of July 4, depending on it ability to reach agreements with the suppliers, he said.
Sale of factory
Saab aims to reach a deal this week on the sale of its factory, Geers said. Saab plans to sell the property and then lease it back to raise cash. Swedish Automobile NV, Saab's Dutch owner, formerly known as Spyker, fell 1.5 percent to 2.75 euros as of 12:12 CET.
Saab also hopes that the European Investment Bank, the European Union's lending arm, will clear a 29 million-euro ($41.6 million) payout to Saab "within a few weeks" under a previously approved 400 million-euro financing agreement, Geers said.
Palm said 1,000 to 2,000 auto-supplier jobs in Sweden will probably be lost if Saab, which employs about 3,600 workers in Trollhaettan, goes bankrupt.
Source: BloombergContact Automotive News