UPDATE 3-Saab suspends output while it seeks parts and cash

Thu Jun 9, 2011 6:29am EDT

Related Topics

* Spyker's Saab sees halt of days, not weeks

* Aims to secure component supplies, further funding

* Spyker shares flat after falling some 3.0 percent

(Adds quote from suppliers' group, updates share price)

By Sara Webb and Mia Shanley

AMSTERDAM/STOCKHOLM, June 9 (Reuters) - Struggling Swedish carmaker Saab will keep its production lines halted until it secures an agreement with remaining suppliers as it negotiates more funds, Dutch owner Spyker SPYKR.AS said on Thursday.

Saab was shut down for most of April and May and only got output going again on May 27 after reaching a deal with Chinese auto dealer Pangda (601258.SS) to buy 30 million euros worth of cars. Pangda later signed for 15 million euros more of vehicles.

Spyker Chief Executive Victor Muller told ANP-Reuters he expected production would be down days rather than weeks and said the Pangda deal was not at risk of falling through. The new stoppage began on Tuesday and on Wednesday the company had said it was making a judgment day by day on production.

Saab is trying to ensure a steady flow of components but Muller said some suppliers were demanding upfront payments instead of accepting credit lines.

"Thus far we have reached agreements with the vast majority of our suppliers and we are confident that we will reach agreement with all remaining suppliers in the coming days, thereby stabilizing our operations and our production in particular," he said in a statement.

"However, it is not to be excluded that we will see production hiccups in the near future until the supply chain is fully back to normal."

The new stoppage has brought fresh uncertainty for the iconic Saab brand, which Spyker rescued from closure by former owner General Motors (GM.N) at the start of 2010.

"We've really had a false hope that Spyker ownership would change the nature of the company," said Kelly Odell, founder of consultancy Think Tank Management.

"If one of the world's largest automobile maker couldn't make it work, why could one of the smallest make it work?"

"If there's going to be a future for Saab it really needs to be someone with a clear vision and someone with deep pockets to get that done."

WANTS STABLE SUPPLY

Muller said output would resume once the stable supply of components and parts had been agreed.

The company has some 10,000 orders on hand, including those for the Saab 9-4X, which is being built in Mexico.

Svenake Berglie, chief executive of the FKG suppliers' sector organisation in Sweden, told Reuters he believed Saab was having problems with just a few suppliers. He also thought the issue was mainly with suppliers overseas rather than in Sweden.

"All it takes is that they are missing just some parts and they can't build cars," he said. "The fundamental problem is that Saab doesn't have enough money though I know that it is working hard to get the financing."

Saab said it was working on a number of steps to secure further short and medium-term financing though it gave no further details. Muller said new shares were always an option.

Spyker shares were flat after falling some 3.0 percent on news of the further production halt.

A spokeswoman had said on Wednesday that Saab had not been able to draw 29 million euros of a European Investment Bank loan. The company is still eyeing a sale and leaseback of its plant with Russian investor Vladimir Antonov, who also wants to take a stake in Saab. [ID:nLDE75719N]

Pangda, which raised nearly $1 billion in its initial public offering in April, wants to take a 24 percent stake in Spyker for 65 million euros, or 4.19 euros per share, as part of a 110 million euro deal. [ID:nL3E7FS079] [ID:nLDE74F0FK] (Additional reporting by Patrick Lannin in Stockholm; Editing by Hans Peters)

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