I covered an article at GP.se earlier this month, where they reported that Saab might run into money problems if they have to wait until September to secure their EIB loans.
There were several other reports to contradict this, but the story still lingers.
Today, GP.se are covering it again, though now with quotes from Saab's head honcho, Jan-Ake Jonsson:
Saab needs new money in the summer to go up in production. It says CEO Jan-Åke Jonsson to GP from Almedalen.Under the heading "What is the future for the Swedish car industry", the Saab's CEO Jan-Åke Jonsson and Industry Minister Maud Olofsson State Jöran Hägglund to discuss on a plank of Almedalen today.
But really, they have much more drastic - and [important?] question - discussions to bring in a concrete plan.
It is about Saab's very near future.
- We would have to go up in output relative to the orders we have," says Jan-Åke Jonsson when GP meet him in Almedalen.
But there is no money to do it.
Therefore Saab is trying, by all means, to accelerate the loan process for loans from the European Investment Bank, EIB.
But Saab is also negotiating so-called överbryggnadslån, or emergency loans, directly with the Swedish state.
- We have discussed it, but not received a hearing so far, says Jan-Åke Jonsson.
Saab, together with the new owners, for discussions with Riksgälden and EIB to try to speed up the process to obtain clearance from the EIB loan earlier than September 22. It is the date mentioned as the earliest EIB's board could decide on the loan.
- The EIB has a board meeting in July We are working with the EIB to see if we can not move the decision until July," said Jonsson. We have not excluded it.- ....it allows us to adapt our operations so that the money is enough.
Now, we should bear in mind that earlier reports told us that JAJ and Saab's administrator, Guy Lofalk, both stated that Saab had enough money to get them through to new ownership.
It may be that increased orders mean increased costs without revenue flowing through in time to cover those increased costs. A basic cashflow problem.
It should also be remembered that Saab can't use EIB money to cover production costs. This money is earmarked for investment in new technology.
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Thanks to Per and Magnus!
It seems possible that the costs associated with moving tooling from Russelsheim and Graz would qualify for the EIB funds.
The only bad thing of that is that as there is an increase of stakeholders, more difficulties to manage the company and all the shareholders have a common strategy and you must deal with more opinions. But for example, the German dealer initiative "Save Saab", it could be an easy and fast way to obtain fresh money, to increase the brand image of customers that are interested in the company, loyalty and so. It won't be a lot of money, but if you remember from the last info about them it could be a good injection of cash flow for short term operations.
There was 26 more investors interested in the company, what about to give them a chance for one or two of them?? Merbanco?? Power Circle??
Regards
http://www.fleetnews.co.uk/news/story/Saab-regains-its-lease-footing/50551
seems some in UK are more confident as of fifteen minutes ago at future of New Saab...
News today is Saab (and Hummer and Saturn) will go into 'Liquidation GM' until sale is finalized as 'New GM' "buys" assets as soon as GMNA emerges from Ch11, still expected to happen this week.
Normally, a business could get short term credit secured by the new inventory. What is normal in this situation? I am not sure there is ANY (legal)private capital willing to temporarily loan Saab enough money to get to end of September until
the K-egg Group AB deal emerges into the sunlight, which could happen in the next week. Once Swedish government is ready to guarantee EIB loans, they should also be ready to supply short-term loan for actual production in August/September.
JAJ did good by saying this at Almedalen. Hope he had copies of orders to hand over to Hagglund.
I think Jöran Hägglund would be mad if he wasn't willing to help SAAB to be able to produce at a higher rate.
As Jöran Hägglund was also a speaker in the same sesion as Jan-Åke Jonsson it would be interesting to have a transcript of the whole session.
And this is really a case of when it rains manna, the poor have no spoons (Swedish proverb).
For what Jan-Åke Jonsson is talking about is to remain at a minimal production level even though Saab could increase production and sales.
- We're at a very low level, about 100 cars a day, says Jan-Åke Jonsson. If we aren't granted a loan, we'll have to remain at that level.
For any contribution of capital from the new owners is not to be expected, Jan-Åke Jonsson informs us when asked how much money he thinks would be reasonable for the new owners to put in:
- We have a plan based on us turning Saab around with the help of loans from EIB, the government and the contribution from GM (the old owners).
Jan-Åke Jonsson has previously said that it is based on a contribution of money and other help in the form of technology and tools from GM for a billion dollars in total.
But what are the new owners contributing then?
- There may come a time when we need a buffer, or we may need to develop a new car model that we are unaware of today - then we may need a contribution of capital from the owners, says Jan-Åke Jonsson.
That time is apparently not now, even though Saab are obviously balancing on the brink.
Also, there is a follow-up story where Jöran Hägglund makes it clear that it is highly unlikely that any EIB money will be forthcoming before September.
But the thing is, in the same way as the government said; "No tax pay money will be for Auto Industry" in few words, they take too much efforts to be a lobby on who is going to be the new owner and block anything they don't like, in the same way if there is any chance to introduce fresh money in the company in short term that isn't from taxpayers and means they could reduce the amount of money from EIB loans needed, they will move as quick as possible to do it real, as an Aero turbo overtaking a truck xDDDD.
For the big amount of money Saab, GM and koenigsegg spend in Legal advise and financial advise, they have various possible solutions for the situation.
regards
1) Saab is in bad shape and getting worse. Cash is short and the distribution network weakens every week.
2) The new owner isn't planning to contribute capital into the purchase as mentioned above? No "skin in the game"?
1 and 2 above don't add up, at all.
Hmmm.
What I believe is being said here is that JAJ and SAAB have a plan based on the very real situation that the sale has not been closed and therefore there are not yet new owners to inject capital. This is just commonsense planning for the worst case scenario. Something SAAB is famous for; passive safety measures.
You hope you won't need the airbags (loans) but sometimes stability control (JAJ) is not enough to save you from other out of control drivers (GM/GFC).