Saab's Owner Issues Shares, Says it Can Pay Salaries

Aug. 3, 2011
Sale will generate $9.2 million.

Swedish Automobile, the Dutch firm which owns beleaguered automaker Saab, said on August 3 that it was issuing new shares and should be able to pay some of its workers this week for the month of July.

"Swedish Automobile announces today that it issued a subscription notice for five million shares under the current 150-million-euro equity facility between Swan and GEM Global Yield Fund Limited", an investment fund which already has a stake in the company, the company said.

According to company's share price in early trading on the Amsterdam stock exchange, the sale would generate about 6.4 million euros (US$9.2 million).

Saab, which is facing a mounting liquidity crisis and bankruptcy threats, had so far been unable to pay the salaries of its 1,600 white-collar workers, lamenting late last month that "some of the funds that were committed by investors were not paid in time to effect such salary payments."

Saab's some 2,000 factory workers, covered by a collective wage agreement, had meanwhile received their salaries.

On August 1, Union, a trade union representing around 1,000 of the unpaid employees, had threatened to launch legal procedures aimed at forcing the carmaker into bankruptcy if the salaries were not honored.

"We are happy to learn that the company can pay its salaries, if that is in fact the case," said Anette Hellgren, Union's representative at Saab. "But we will keep a close eye on things until the money has been transferred into the accounts."

Swedish Automobile said it was working on a solution to find more short-term funding that could allow it to "restart and sustain production," which has been more halted than not since April.

Company spokesman Eric Geers told the TT news agency the cash from the share emission would come in "early enough so we can pay ... workers this week." Geers would not say how much money the troubled company owed its employees.

"First we will pay the salaries, and then we will work to relaunch production," he said, stressing though that would not happen until the end of August at the earliest. "We need more financial muscles. We're working on it."

Saab has made no cars since its Trollhaetten factory shut production last on June 8.

Swedish Automobile said it would divulge the exact amount of shares issued and how much GEM had paid for them once a 10-day period had passed.

Iconic Swedish brand Saab was saved at the last minute at the beginning of 2010 when it was bought by small Dutch firm Spyker -- now known as Swedish Automobile -- from U.S. giant GM. The new owner had big ambitions for Saab but the carmaker has since then lurched from one cash crisis to another.

At the end of July, Saab had 3,700 employees.

Copyright Agence France-Presse, 2011

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