Thursday, June 23, 2011

#Saab cannot pay workers’ wages

The company that makes Saab cars said it could no longer pay its employees’ wages because it had failed to secure short-term funding for its business.

The news will fuel doubts about the survival of the struggling Swedish carmaker, which has a tentative deal to sell its cars in China, but has had to halt production because of problems paying its suppliers.

Saab is hoping that the provisional deal struck with the two Chinese investors will help solve its longer-term financial difficulties.

Under the non-binding deal, Zhejian Youngman Lotus Automobile would invest 136m euros for a 29.9% stake, while Pang Da Automobile would increase its investment to 109m euros, retaining its previously-agreed 24% stake.

However, the deal needs approval from Chinese and European regulators and the European Investment Bank.

If the agreement does go through, both Swedish carmakers would have Chinese ownership.

The company names the US, UK, Germany and Italy as its biggest markets. 

In Britain it has sold 3,244 cars so far this year, according to industry figures in May, representing just 0.38% of the total. However, that represents a sharp increase from 1,813 for the same time period in 2010.

Saab's main factory stood still for over seven weeks during April and May as suppliers halted their deliveries to Saab over unpaid bills.

Production started up again on May 27 but stopped again on June 8 when the company complained it was missing components for the assembly line.

Assembly line workers were informed in a meeting on Monday that they would not be needed back at work until Monday, July 4.

According to the latest Saab statement, the company is in talks with several different parties in order to raise the cash both in the short run and through property sales and leasing.

According to the Saab statement there are no guarantees as of yet that these discussions will prove successful enough to result in more money. 

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