UPDATE 1-Saab says production halted 2 more weeks

Mon Jun 20, 2011 10:17am EDT

* Talks continue with suppliers on payment

* Output halted most of April-June amid financing problems

(Releads, adds Saab comment)

By Helena Soderpalm

STOCKHOLM, June 20 (Reuters) - Troubled Swedish carmaker Saab, owned by Netherlands-based Swedish Automobile , said on Monday output at its factory in southern Sweden would stay still for another two weeks.

The Trollhattan factory stood still for most of April and May because it could not pay its suppliers. It started making cars again late in May, but was quickly forced to halt again when parts supplies ran out again.

"There will be no normal production during weeks 25 and 26 (June 20th-July 3rd)," Saab spokeswoman Gunilla Gustavs said.

Swedish Automobile, which recently changed name from Spyker, said on June 9 Saab's production lines would be halted until the struggling company secured an agreement with all suppliers.

"We are still negotiating with all suppliers and we need to get everyone on board at the same time," Gustavs said. "The weeks of 27-29 (July 4th-24th) are planned to be normal working weeks".

In recent weeks, Saab has agreed a rescue package from two Chinese car companies, Zhejiang Youngman Lotus Automobile Co and Pangda which, if approved by authorities in China and Europe, will solve its mid and long-term financing problems.

However, short-term financing remains a problem with the company pinning its hopes on a quick sale of its factory to give it cash to restart production.

Swedish business daily Dagens Industri said on Monday, citing sources, talks had been held over the weekend with Swedish property company Hemfosa on a sale and leaseback deal for the plant and property of Saab in Trollhattan.

The paper said Hemfosa was prepared to pay around 300 million Swedish crowns ($46million) for Saab's properties.

"There is nothing new that we can communicate," Gustavs said on its building sale plans. "That is still being negotiated". ($1 = 6.457 Swedish crowns) (Editing by Dan Lalor and Jon Loades-Carter)