Saab can’t pay salaries

Troubled Swedish automaker insists it’s not headed for bankruptcy

June 23, 2011   by Canadian Manufacturing Daily Staff

STOCKHOLMThe end of the road is inching nearer for Swedish automaker Saab.

The company’s owner, Swedish Automobile, says it cannot pay staff wages as it struggles to find funding from investors.

The news is the latest blow to the Swedish car brand whose production has been idle for weeks while it has searched for money to pay suppliers.

Market watchers have long been skeptical about Saab’s survival but the brand insists it is not headed for bankruptcy.

“We’re saying we don’t have funding to pay out salaries but we’re working day and night to find a solution,” says Saab spokesman Eric Geers. “We’re assuming we’ll find a solution.”

It is uncertain when salaries will be paid again.

Swedish Automobile says it’s in talks with various parties to solve financial difficulties, but warns there is “no assurance these discussions will be successful or necessary funding will be obtained.”

The talks include selling off Saab’s property and then leasing it back to raise cash.

Saab is trying to reach a deal to continue receiving parts and components to resume production after being halted for weeks because it couldn’t pay suppliers. The first plant to shutdown has been closed for almost seven weeks.

The latest closure has lasted about three weeks.

Saab was sold to Swedish Automobile for $74 million in cash plus $326 million worth of preferred shares by General Motors (GM) in 2010.

In its 10 years with GM, it struggled to make a profit.

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