Spyker has to raise more cash to make Saab profitable

Article by Christian A., on August 27, 2010

To sustain profitability, Spyker has to raise more money for its $400-million acquisition of Saab. Making this goal more complicated is the fact that Spyker has to achieve this amid the changes in the global automobile industry. Last month, Saab avoided closure when Spyker CEO Victor Muller snapped it up.

But now, Spyker faces the challenge of doubling Saab's production, rolling out new models and building a robust distribution network. These activities mean that Spyker will require hundreds of millions of dollars in new investment.

Tim Urquhart, analyst at IHS Global Insight, said that Spyker's would be forced to ask investors for additional capital. He added that Muller has a lot to prove; Spyker has got its work cut out for it.

According to Spyker, it has sufficient financing, about $1 billion, to develop new models and become profitable by 2012, including the new Saab 9-5 based on an Opel platform.

Saab's operations can be kept afloat with the $200 million that it has in the bank, a 400 million euro European Investment Bank loan and the preference shares issued to GM. These shares are said to carry hefty dividend payments of 6% from 2012 and 12% from 2014.

The presence of a 150 million euro credit facility helps too. It is believed that Spyker is preparing to tap new investors. Last week, Muller told shareholders that he would seek to list Spyker shares in London and Stockholm, and possibly delist from Amsterdam.

However, there's still no confirmation. When Muller was asked if those actions would make it easier to raise cash, Muller responded that the goal would be to become "closer to investors."

It can still be recalled that Muller's skill at getting investors has helped out Spyker several times before. One memorable instance was when he saved the company after an attempt to break into Formula One racing in 2007. [via autonews]

Topics: spyker, saab, profit

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