Another Death Watch? Saab Announces It Can’t Pay Employees

#Saab

We already knew that poor Saab was struggling; yesterday, it offered to pay its suppliers only 10 percent of its outstanding debts. Today, the ailing automaker is offering up a worse deal for its employees: no pay!

Saab’s financial situation has become dire, to say the least. The company now has so little short-term cash that it is no longer able to pay any of its employees. In a prepared release today, it said that it was in discussion with “various parties” to resolve the funding issue through the sale and lease-back of its real estate. (Haven’t we heard this one before?)

Interestingly, Saab appears to have had a bit of a reality check, as its latest press statement says“There can, however, be no assurance that these discussions will be successful or that the necessary funding will be obtained.”

Saab’s newfound realistic outlook is not assuaging fears with labor unions, however. The IF Metall and Unionen groups representing Saab’s workers are demanding that the automaker pay its members wages by Monday, saying it needs to resolve the short-term cash flow issues immediately. If Saab does not pay up, IF Metall has threatened to enter legal proceedings to procure the wages, something that would most likely end only in bankruptcy for the automaker.

In attempts to secure short- and mid-term financing, Saab has entered into two deals with Chinese companies: one with Pang Da for a bulk purchase of vehicles, and one with Youngman Lotus Automobile and Pang Da for a Chinese-based manufacturing joint venture. Both deals, however, are still pending official approval from various world governments and agencies.

Source: Saab, Automotive News (Subscription required)

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