UPDATE 2-Saab warns may not get funding as losses mount
* H1 2011 operating loss soars to 201.5 mln euros
* Says no certainty funding will be secured in time
* Sees substantial net loss for full-year 2011 (Adds details on financial position, background)
By Greg Roumeliotis
AMSTERDAM, Aug 31 (Reuters) - Swedish Automobile SWAN.AS, the Dutch parent of cash-strapped carmaker Saab, warned on Wednesday it could lose the battle to stay afloat as losses mounted, cash dwindled and time was running out.
The famous Swedish car manufacturer has lurched from one cash crisis to another in recent months, scrambling to fend off bankruptcy, pay its workers, and restart production. Its car plant has been mostly idle since April because suppliers refused to deliver parts until their bills were settled.
As a result of the production stoppage during most of the second quarter, Swedish Automobile said its first-half operating loss widened to 201.5 million euro, from a 21.9 million euro operating loss in the first half of 2010, and that it expects a substantial net loss for 2011.
On Friday, Swedish Automobile had said it was "evaluating all available options" after Swedish public radio quoted sources saying that the company was to apply for court protection from its creditors. [ID:nL5E7JQ1K1]
"Right now, the focus of Saab management is on working as hard as possible to bring the company back into calmer waters by significantly strengthening our financial position, reaching agreement with all our suppliers on payment and delivery terms and restart production as soon as possible," Swedish Automobile Chief Executive Victor Muller said in a statement on Wednesday.
PREPARING FOR THE WORST
The firm prepared investors and employees for the worst, saying it was not clear whether funding could be raised to restart production in the short term, or whether funds that have been negotiated for the long term could be secured in time.
On July 4, Saab signed a final agreement for Zhejiang Youngman Lotus Automobile Co. to take a 29.9 percent stake in the company and for Pangda Automobile Trade Co Ltd (601258.SS) to take a 24 percent stake for a combined 245 million euros. [ID:nLDE75F0CP]
But these deals are still subject to regulatory approval, and Swedish Automobile warned that the deals with the Chinese firms as well as additional short-term funding had to be secured in time or it would not be able to carry on "as a going concern."
"We know that we can't look too far into the future just yet," said Muller, adding that there was still investor interest in Saab given its long-term potential. He reiterated that the company's business plan was under review.
The company's net debt swelled to 284 million euros by the end of June from 209 million euros at the end of March, its total cash dwindled further to 100 million euros from 130 million euros, while its net working capital position plunged to a negative 379 million euros from 255 million euros.
With a market capitalisation of just 18 million euros, Swedish Automobile is now a play only for those investors with considerable appetite for risk such as hedge funds. The shares have lost more than three-quarters of their value since the start of the year.
Swedish Automobile said it was still in talks with CPP Global Holdings, an investment vehicle owned by Russian businessman Vladimir Antonov, about the sale of its luxury car business. The deal, announced in February, has been suspended and it added it may consider alternatives for the division.
The Dutch-listed parent, formerly named Spyker Cars for its luxury marque, had said the deal could raise up to 32 million euros. [ID:nLDE70H0JA]
Overall the company sold 12,871 cars wholesale and 15,194 cars retail in the first half of 2011, a year-on-year increase of 26 percent and 44 percent respectively. It is currently in the process of rolling out its new Saab 9-4X crossover model.