Saab Gets More Short-Term Funding; Production Restart Two Weeks Out

Saab Automobile and parent company Swedish Automobile say the auto maker could restart production at its stalled assembly plant in Trollhattan within two weeks after securing a E25 million ($35.8 million) bridge loan from the hedge fund Gemini Investment Fund.

Saab had hoped to restart Trollhattan, down since last week because it lacks the cash to pay employees and suppliers, within one week.

Resuming production hinges on new agreements with parts makers, including feasible delivery schedules, the auto maker says.

Saab says it paid its employees their June wages today.

“We have clearly gone through a very rough patch in the past few weeks and hopefully we can now reach agreement with our suppliers so as to ensure a resumption of our production in a controlled way,” Victor Muller, CEO of Saab and Swedish Automobile says in a statement.

In addition to the Gemini bridge loan today, Saab gained E28 million ($40.1 million) yesterday through a sale of its property and another E13 million ($18.6 million) with a pre-paid order for 582 cars from an unnamed Chinese customer.

Receiving the money from Gemini also will allow the auto maker to draw a remaining E29.1 million ($41.6 million) from a European Investment Bank loan.

Trollhattan produces sedan and wagon versions of the 9-3 and 9-5, plus the 9-3 convertible.

The auto maker has had 14 days of available production since a 7-week stoppage halted output in April and May as the company sought long-term funding for its business.

This was won from Chinese dealership giant Pang Da Automobile in an initial E110 million ($155.2 million) equity investment and car-supply deal.

The Pang Da deal since has grown to E245 million ($350.6 million) with the addition of a third investment partner, Zhejiang Youngman Lotus Automobile.

Saab, Pang Da and Youngman will form a joint venture to build vehicles in China.

Saab says it will repay the Gemini loan in full once it receives the long-term funding from its Chinese partners, a deal awaiting final regulatory approval.

Saab has seen a rocky start to its first year as an independent auto maker in more than two decades, including a failed investment from another white knight from China and the loss of its longtime CEO Jan Ake Jonsson.

General Motors divested Saab last year for $400 million to Muller’s former Spyker Cars unit, which recently changed its name to Swedish Automobile.

GM retains an equity stake in Saab.