UPDATE 2-Saab gets more cash, still no production

Tue Jun 28, 2011 6:05am EDT

* Signs property sale, leaseback deal valued at 28 mln euros

* Swedish investors to buy 50.1 pct stake in Saab property

* Saab needs deal with suppliers to get production started

(Adds detail, Saab comment, shares)

By Roberta B Cowan and Simon Johnson

AMSTERDAM/STOCKHOLM, June 28 (Reuters) - Cash-strapped Swedish carmaker Saab signed a 28 million euro ($40 million) property sale on Tuesday, but production will remain halted until it reaches a deal with suppliers on unpaid bills.

Saab and Dutch parent Swedish Automobile have been scrambling for cash since early April when unpaid suppliers stopped deliveries, stopping production.

Last week Saab said it could not pay workers, leading trade unions to threaten to force it into bankruptcy proceedings.

Swedish Automobile said it had reached a conditional deal to sell 50.1 percent of Saab's property unit to a consortium of Swedish real estate investors led by Hemfosa Fastigheter.

The deal followed Monday's lifeline when an undisclosed Chinese firm ordered 582 cars for 13 million euros and agreed to pay this week, covering Saab's wage bill and some unpaid debts to suppliers.

While short-term funding now looks more secure, Saab has not reached a deal with parts makers to begin delivering again.

"Today's news takes us a good way in the right direction, but it is the agreement (with suppliers) that matters and only then will we be able to communicate a date when we can restart production," Saab spokeswoman Gunilla Gustavs said.

Saab said on June 20 production would be down for at least two weeks after stoppages during most of April, May and June.

Swedish Automobile shares were up 10.6 percent at 1.1610 euros at 0922 GMT.

CHINESE

Saab is no stranger to financial trouble. It filed for bankruptcy protection in early 2009 after former parent GM said it would cut ties with the brand after nearly 20 years of losses.

Swedish Automobile, then named Spyker, bought Saab for $400 million in January 2010. Spyker itself has never made a profit. Saab fell well short of its first-year sales targets under its new owner, leading to the escalating cash crisis.

The company expects to strengthen short-term funding further.

"There are other initiatives still being pursued. There is not much we can say about that until we have something concrete to communiticate," Gustavs said.

Longer term, two Chinese car companies, Zhejiang Youngman Lotus Automobile Co and Pangda plan to buy into Saab, though the Chinese authorities, Sweden and the European Investment Bank (EIB) still need to approve the deals.

Saab is also hoping for an investment from Russian financier Vladimir Antonov.

The real estate investors have the right to purchase additional shares in Saab Property, increasing the total deal to 33 million euros.

"We will continue to add value for Saab Automobile in developing the property," Hemfosa Fastigheter chief executive Jens Engwall said.

As a result of the deal, the amount Saab can borrow from the European Investment Bank under a previously agreed facility will be reduced to 280 million euros from 400 million. Saab has already borrowed 217 million euros of the total.

The loan, guaranteed by Sweden, gives the EIB, the Swedish Debt Office and the government a veto over changes in ownership at Saab, which said it expected approval from all three parties for the real estate deal shortly. (Reporting by Roberta B. Cowan and Simon Johnson; Editing by Sara Webb and Dan Lalor) ($1 = 0.7062 euro)

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