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Owner of Sweden's Saab can't pay wages

Owner of Sweden's Saab can't pay wages

June 23rd, 2011 in News

STOCKHOLM (AP) - Swedish Automobile said Thursday it cannot pay the wages of staff at wholly owned subsidiary Saab, as it struggles to find funding from investors.

The news is the latest blow to the Swedish car brand whose production has been idle for weeks while it has searched for money to pay suppliers.

Market watchers have long been skeptical about Saab's survival, but the brand's spokesman Eric Geers insisted the group is not headed for bankruptcy.

"We're saying that we don't have funding to pay out salaries, but we're working day and night to find a solution," he said. "We're assuming we'll find a solution."

He could not say when salaries are expected to be paid out again.

Swedish Automobile - which recently changed its name from Spyker - said it is currently in talks with various parties to solve the financial difficulties, but warns that there can be "no assurance that these discussions will be successful, or that the necessary funding will be obtained."

The talks include selling off Saab's property and then leasing it back to raise cash.

Meanwhile, Saab itself is attempting to reach a financial deal to continue to receive parts and components to resume production after it was halted for weeks because it couldn't pay suppliers. In the first shutdown the plant was closed for almost seven weeks, and in the latest closure it has been down for about three weeks.

Saab was sold to Swedish Automobile for $74 million in cash plus $326 million worth of preferred shares by General Motors last year.

During its 10 years with GM, Saab struggled to make a profit.