Saab’s financial woes have only gotten worse over the past few weeks, as we last reported that the company didn’t have enough money to pay its employees late last month. Strapped for cash, the Swedish automaker sought to sell its property and lease it back in order to gain some liquidity. Now, Saab reports that that deal has just been approved by the EIB (European Investment Bank), the Swedish National Debt Office and the Swedish government. Although the deal is worth SEK 255 million (nearly $40 million U.S.) and will put a bit of cash in Saab’s pockets, the automaker says that the production halt will continue until August 9.
Saab’s land will be purchased by a consortium of Swedish real estate investors, which has agreed to buy 50.1 percent of the shares in Saab Property AB, totaling SEK 255 million. The property, which includes a 408,000-square-meter building, will be leased back to Saab free for one year – an aspect of the deal that was reflected in the transaction price. The consortium has the right to purchase more shares, raising its commitment to SEK 300 million if it so chooses within 30 days after the deal closes. Saab has entered a 15-year lease agreement, with the prospect of refinancing at a later date.
Although the deal is worth SEK 255 million, Saab will receive a cash payment of SEK 205 million (roughly $32 million U.S.) with the remaining amount being paid in the form of sellable bonds which can later be converted into shares of the companies purchasing the property. With the closing of this transaction, Saab claims it will have raised 61 million Euros in funding commitments over the past few weeks. Despite its newfound liquidity, Saab blames the continued production halt on the summer shutdown period many of its suppliers go through and also on the fact that many of them require a longer lead time to resume deliveries. As a result, the Swedish automaker says it will restart production on August 9, provided that the deal’s closing, expected to take place today, goes smoothly.