Swedish Automobile disclosed that an investment fund will take a substantial stake after a new share issue. The company is the owner of cash-strapped car manufacturer Saab which has been rushing to pay workers and to be able to restart production.
The Swedish vehicle manufacturer has moved from one cash crisis to another in recent months, and in April, it was forced to halt operations at its factory as it failed to settle the bills for the suppliers of components.
It has also announced that it is entering new funding plans with existing shareholders and Chinese partners in a bid to avoid bankruptcy.
However, the new share issue which has been announced on Wednesday is unlikely to buy Saab much time. Based on the current share price, it would increase just under 7 million euros.
Analyst Tom Muller at Theodoor Gilissen commented that the company has much more to do. He also shared that looking at where the share price is, the company would still need least 50 million euros to pay suppliers and get things started again.
Swedish Automobile has revealed that GEM Global Yield Fund Ltd. will acquire about 5 million new shares in the Amsterdam-listed company, increasing its hold to the company to 17 percent.
The company also stated that it has issued a subscription notice for the shares under a 150 million euro equity facility, which was established in early 2010. Last month, Saab was able to avoid a bankruptcy claim by settling with a supplier.
However, it announced within days that it was unable to pay almost half its employees due to the fact that some of the funds committed by investors had not been timely paid.
On Wednesday, the automaker said it expects to pay the wages of its white-collar workers this week. The company and its automaker unit remain in discussions with parties to obtain further short-term funding that will allow them to resume and maintain production.