VILNIUS - The Swedish government is working to enable Saab Automobile to receive a commercial bank loan to let the cash-strapped Swedish carmaker avoid bankruptcy, say people familiar with the situation, reports Bloomberg. The loan would most likely come from Bankas Snoras in Lithuania, which is controlled by Russian investor Vladimir Antonov, said one of the people, who declined to be identified as the talks are private. Antonov is seeking to take a stake in Saab’s owner, Spyker Cars NV.
The agreement would give a financial lifeline to Saab, which has been forced to halt production amid a payment dispute with suppliers, while the government analyzes whether to clear Antonov as an investor, the people said. The government is involved because it’s guaranteeing Saab’s 400 million euro loan from the European Investment Bank, the European Union’s lending arm.
Spyker bought Saab from General Motors Co. in February 2010 for 74 million dollars in cash and 326 million dollars in preferred shares. Saab first suspended production on March 29 after suppliers stopped delivering components. Saab Chief Executive Officer Jan-Aake Jonsson said on April 4 that the Trollhaettan, Sweden-based company’s liquidity “became more strained” during the second half of the first quarter, declining to give more details.
Gunilla Gustavs, a Saab spokeswoman, declined to comment. Frank Nilsson, chief of staff for Industry Minister Maud Olofsson, also declined to comment.
Saab’s sales have plummeted in recent years and the carmaker was on the brink of shutting down during the financial crisis before Spyker bought it. Last year Saab sold 31,696 cars, down from an original forecast of between 50,000 and 60,000 vehicles. Sales were hurt in 2010 because it took longer than expected to restore the flow of production after GM emptied the factory and cut Saab’s supplier ties in January of last year, Spyker CEO Victor Muller has said.
Saab, which introduced the new 9-5 sedan last year and in the coming months plans to roll out the 9-4X crossover and 9-5 wagon, aims to sell 120,000 cars and become profitable by 2012. Its best year was in 2006, when it sold 133,000 autos.
The Swedish government has agreed to let Saab free up collateral now used to back the EIB loan, of which Saab so far has drawn 217 million euros, contingent on the carmaker finding a commercial bank able to make the loan. The freed-up collateral could then instead be used to secure the commercial credit. The government’s guarantee is backed by collateral such as Saab’s factory and after-sale business.
Lawyers are now working on the loan deal, which may be approved as early as this week, said two people.
Saab would likely borrow around 34 million euros from Bankas Snoras, one of the people said. This would allow the struggling carmaker to pay suppliers and restart production while it waits for clearance to bring in Antonov. Antonov is ready to invest at least 50 million euros in Saab, Lars Carlstrom, his spokesman in Sweden, said April 8.
Antonov has agreed to cap his stake in Saab at 30 percent, Carlstrom said then. Antonov in February announced plans to buy Spyker’s sports car unit.
The Swedish brand, which has about 3,800 workers, has faced no shortage of skeptics, including Fiat Chief Executive Officer Sergio Marchionne, who have questioned the small carmaker’s ability to survive in the volume-driven car industry. “I like the Saab brand,” Marchionne said in January 2010. “I think it’s very difficult to be a niche player and profitable.”
Saab maintains that it can earn a profit once upcoming models are introduced by keeping costs down and finding innovative revenue streams, such as potentially selling the rights to other carmakers to share a new vehicle platform it has developed.