UPDATE 1-Spyker's Saab says to restart production Friday

Thu May 26, 2011 9:09am EDT

* Move to coincide with Pangda CEO visit

* Plant has been idle for six weeks due to cash crunch

(Adds Saab comment, background)

STOCKHOLM, May 26 (Reuters) - Struggling carmaker Saab Automobile said it was gearing up to restart its production line in Sweden on Friday, after being idle for six weeks due to cashflow problems.

Saab owner Spyker SPYKR.AS has been struggling to turn round the Swedish carmaker since its acquisition from General Motors (GM.N) last year. It ran out of cash to pay suppliers in April, halting production and pushing it to the brink of collapse.

"Based on the information we have, it looks like we will start up production tomorrow," spokeswoman Gunilla Gustavs said.

The automaker has been in intense negotiations with suppliers in recent days. Gustavs said agreements had been reached with a sufficient number to allow for a resumption of output from its plant in Trollhattan, southwest Sweden.

"We have a critical mass to get production started," she said.

Spyker has been seeking solutions to ease its cashflow problems but has had to wait for approval from authorities in Sweden and the European Investment Bank, according to the terms of an outstanding loan.

Chinese car distributor Pangda (601258.SS) is waiting for regulatory approval at home for its rescue of Saab in a deal worth up to 110 million euros ($154.7 million). [ID:nLDE74M083]

Spyker received an advance payment of 30 million euros from Pangda last week and had set a goal to restart production by the end of this week, in time for a visit by Pangda Chief Executive Pang Qinghua.

Pang was in Stockholm on Thursday for meetings with Enterprise Minister Maud Olofsson and the Swedish debt office, which administers the loan guarantees granted Saab by Sweden, but was expected in Trollhattan on Friday, Gustavs said.

Earlier on Thursday, business daily Dagens Industri quoted Gunnar Brunius, Saab's vice-president of purchasing and manufacturing, as saying the aim was to start roll out 100 cars on Friday instead of its usual 230 to 240 per day.

($1=.7110 Euro)

(Reporting by Mia Shanley; writing by Niklas Pollard; editing by Hans Peters and David Hulmes)

Comments (0)
This discussion is now closed. We welcome comments on our articles for a limited period after their publication.