Things look great for Saab – at least on paper, the struggling Swedish maker haven’t lined up an assortment of investors promising to pump $100s of millions of dollars into the company – but the reality is far more bleak.
With unpaid suppliers increasing pressure to get Saab to pay the $625,000 they’re owed, the Swedish Enforcement Agency is warning it may begin legally seizing the carmaker’s assets. That would be a very likely prelude to the collapse of the company, which has been struggling to re-open its headquarters factory in Trollhattan since partsmakers began a boycott in March.
With the factory that produces the flagship 9-5 model, as well as the smaller 9-3 idled, dealers around the world have been running short of product. And Saab’s coffers continue to drain since its revenue stream begins the moment products roll off the line.
The company desperately needs a “major automotive partner,” asserts IHS Automotive analyst Aaron Bragmann, but there is no one likely to come to Saab’s rescue at this point, he contends, a position most other analysts echo.
Saab thought it had found a white knight – several, in fact – when it began lining up a series of deals in China. The first fell through just days after it was announced. The second and third, with car dealer network Pangda, and the emerging Chinese automaker Zheijang Youngman Lotus Automobile Co., remain caught up in bureaucratic red tape.
Other proposed bailout efforts, including a multi-million-dollar stock purchase proposed by Russian banker Vladimir Antonov, have also been put on hold.
The good news was that Saab earlier this month raised enough cash to pay its white-collar Swedish workers. But despite selling another 4 million shares to the GEM Global Yield Fund, this week, it has not found the cash to cover all the bills piled up by its suppliers. As a result, it missed the latest target date for restarting the Trollhattan plant, two weeks ago, and isn’t even setting a hard alternative timeline.
“We have contacted Saab’s banks,” announced an official of the Swedish Enforcement Agency on Wednesday, a prelude to a seizure of Saab assets, which could come in the next few days as more of the company’s outstanding bills come due.
The big hurdle – should Saab squeak through this week – will come at the end of the month when its 3,600 Swedish workers are expected to receive their next paychecks, a bill that will come to millions of dollars.
Normally optimistic Saab officials are not discussing their plans as the company continues to lurch from crisis to crisis.
Compounding matters, reports indicate that a number of Saab dealers, frustrated by the company’s ongoing crisis, are either abandoning the franchise or closing their doors entirely, including one in New York State that had represented the brand for 50 years.