For the second time in two years, Saab is perilously close to the edge of the cliff. But it may be rescued, once again, at the 11th hour: according to a company source close to negotiations with Chinese investors, Saab Automotive executives are “very optimistic” about raising funds this week.
Now haven’t we’ve heard that before? Only this time, Saab Chairman Victor Muller told Automotive News that he is seriously considering reorganizing the company to protect it from its creditors. And this comes just three days after Saab’s head of technical development, Mats Fagerhag, denied the Swedish public radio’s report that the carmaker is seeking court protection.
“We will not rule out anything,” said Muller. “We are focused on a solution. If the collection agency moves forward we have to protect ourselves.” Muller is the man who saved Saab last year just before former owner General Motors was getting ready to pull the plug on the ailing Swedish brand for good.
And while it has added three new models in its range (9-5, 9-5 estate and 9-4X), announced quite a few deals, mostly with Chinese investors, and even unveiled plans for three future models, cash flow hasn’t materialized. Therefore, the company hasn’t been able to pay off its suppliers nor restart production which has practically stopped since April.
The main problem Muller is facing right now is short-term funding. He may have closed the deal with Pang Da and Zhejiang Youngman Lotus Automobile, but this deal hasn’t been ratified yet. Nor will it be until mid-October. So he is obviously trying to buy some time until the cash arrives.
Since debt collectors are already moving against Saab the company has the option, Muller said, of seeking court protection from its creditors while it is restructuring. But it won’t be easy. In fact, Lars Holmqvist, CEO of the Belgium-based European auto suppliers association, described Saab’s rescue attempt as a “Herculean task”.
According to Holmqvist, in order to get court approval for reconstruction Saab must prove that its plan has a good chance of succeeding. And this “takes a lot of money”, adding that the company already owes its suppliers nearly €100 million ($144.1 million). And then there’s of course the issue of paying its unpaid workers who are threatening to declare the company bankrupt. A Herculean task indeed…
