Saab’s problems are truly endless. You know the story by now: countless near-death experiences, only for management to pull another trick out of their hat to save the company. The latest event in this made-for-TV drama unfolded when Saab filed for restructuring last month. Similar to our bankruptcy, Swedish law allows for companies to voluntarily reorganize during a period where the government will pay worker salaries. For Saab, which was unable to pay employees, this was particularly attractive. At first Saab’s request was rejected, but then it got overturned by a Swedish court. The ruling was based on a judge’s evaluation of whether or not Saab’s business plan was viable. Saab’s pitch to the court centered on the Chinese funding its secured from distributor Pang Da and manufacturer Youngman Automotive.
The companies mentioned, in cooperation with Saab, signed deals in July to set up manufacturing and sales joint ventures. They were to provide medium and long term funding in exchange for a stake in Saab. Reuters is reporting the bridge money during the reorganization period has been delayed. Saab spokesman Eric Geers had this to say about the delay: “The money has not come in yet…..we originally thought it would take about two weeks. The process is ongoing, and we will give information as soon as we have the money….it is hard to say when it will be finished, but it will be soon.”
That isn’t exactly reassuring. Saab is counting on this installment of $96 million to help get it through the three month bankruptcy process. In addition, the sale of Saab’s Spyker business has a few hangups before it can be completed. Once the money arrives though, it will be a much-needed boost. The question is how long can Saab survive without the Chinse funding? Delay is never a good sign. As always, stay tuned.
