Yesterday, OSM reported that Saab was sitting on the edge of certain demise. Swedish courts were ready to rule the company bankrupt and the only hope the 74 year old company had of surviving the week would come in the form of a EURO70 million loan from Chinese investors. Yesterday, that loan was reportedly on hold due to the Chinese government and an uncertain arrangement. Today, that loan has gone through. Well, some of the loan anyway.
The Wall Street Journal reported this morning that Saab has received a chunk of funds from Chinese automotive group, Zhejiang Youngman Lotus Automobile Co. and for the first time in a long while, Saab is seeing a brighter sky. The bridge loan in place between Saab and Youngman is supposedly worth EURO70 million (about $96 million) and will be allocated into paying off wages and back salaries. Saab, who’s wages are being covered by the Swedish government until Oct. 21, can now ween off the last resort aid and begin their resurrection. The Journal reported that they’ve only received EURO10 million (about $14 million) of the total EURO70 million so far, but Saab claims that will be enough to set things in motion for a comeback. They plan to finalize the loan agreement by the end of the week with plans to pay back the capital from their EURO245 million equity investment from Youngman and Chinese import distributor Pang Da Automotive Trade Co.
Apparently, Saab was supposed to receive funds on September 26th; over two weeks ago. Why the reason for the delay and almost disaster? Saab attributes the delay to a Chinese bank holiday. However, an unnamed source, according to The Journal article, claims that Youngman was in a state of hesitation regarding the collateral Saab was providing in the agreement. They simply needed more time to understand the technology and renegotiate the agreement because of this. The agreement, a non-exclusive right to Saab’s Phoenix Architecture Technology in exchange for the EURO70 million loan, has since been reworked and initially instituted.
What this means for Saab is that they are safe from extinction…for now. They are still deep in the thick of it, though. The next few weeks will reveal their fate as they begin their corporate restructuring process. Until they are out of the red, however, it remains to be seen whether the Swedish manufacturer has the true grit to grind it out.
Tyler Baker; OSM Writer
( Source: The Wall Street Journal )