By on August 3, 2011

Swedish Automobile NV, the artist formerly known as Spyker, and owner of struggling Swedish car maker Saab, said today it plans to issue new shares to raise cash in order to meet overdue payroll. Response of the union: “Show me the money.”

“We believe we’ll be able to pay the wages this week, but before we have the money on our account we’re a bit careful,” Saab Automobile spokeswoman Gunilla Gustavs told the Wall Street Journal.

When the transfers of July wages to 1,600 white-collar employees were due last week, Saab could not pay.

Swedish Automobile issued a subscription notice for five million shares under an existing €150 million credit facility between Swedish Automobile and GEM Global Yield Fund Ltd.

Explains the WSJ: “According to this facility, Swedish Automobile can issue shares to GEM at 90% of the average of the closing bid prices of the shares over a period of 15 days.”

Using this formula, the five million new shares would generate proceeds of about €6.5 million.

The Swedish labor union Unionen plans to send a formal demand letter to Saab on Wednesday or Thursday. Once received, Saab has seven days to pay up. If no money flows, the union can file for Saab bankruptcy. The union more or less has to, because if there are no bankruptcy proceedings, there will be no unemployment support for the employees.

“We will send the letter if we can see the money has not been wired to our members,” a Unionen spokesman in Stockholm told just-auto. “We have not seen any money yet. Our process of collection will go on until we see the money is wired to the accounts of our members. No-one will be more happy than our members if … the money is paid this week.”

Unionen represents 1,000 of Saab’s 1,600 white-collar workers. The WSJ says Saab owes Unionen members 35 million Swedish kronor ($5.5 million) in unpaid salaries. If this is the case, then total monthly payroll plus taxes and social fees should be in the neighborhood of $15 to $20 million per month. That’s a lot of  money swirling down the drain while not a single car is made.

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15 Comments on “Saab Wants To Sell Shares To Meet Payroll. Union: “We have not seen any money yet”...”

  • avatar

    I think that that your Jerry Maguire clip, starting at 1:18, thru thru the end, pretty much sums up the SAAB story at this point…

  • avatar

    Saab is dead… did they not get the memo? They should do the reasonable thing and pull the plug.

  • avatar

    “plans to issue new shares to raise cash”

    Who would buy the new shares in Saab ? What chance have they ever got of being worth any more (than zero) in the future ?

    “the union can file for Saab bankruptcy”

    Thereby putting all its members immediately out of work.

    • 0 avatar
      John Horner

      The members are already out of work. At this point they may be reduced to fighting for some of their unpaid back wages, and may need to push the company over the edge formally to get unemployment insurance payments.

  • avatar

    You can’t divide nothing into smaller pieces. Dividing SAAB into more shares is an attempt at it though.

  • avatar

    It’s been fun watching Saab cling on to existence but, uh, I’m pretty sure that shares in Saab are about as good an investment as a week-old lottery ticket.

    See, this is why Internet fanatics shouldn’t be making big corporate automotive decisions. Saab could have got the same clean, respectable death as Pontiac or Saturn, but then the “Save Saab!” crowd showed up. Koenigsegg was smart enough to realize that there wasn’t a viable company there, despite what the Internet vox pop was saying, but I guess Muller wasn’t as smart. Too bad, really. What’s going to happen to Spyker’s supercar department now? Didn’t he have to sell it off to buy Saab?

  • avatar

    So, Saab slides by once more by the hair of its chinny-chin-chin (possibly). What will Saab do in three weeks when the salaries of its blue collar workers are due to be paid? Can Saab pay its taxes? Victor Muller must see something that the rest of us don’t. He must have an inkling that some mysterious investor is waiting in the wings to save Saab. Otherwise, why go through all of the trouble when bankruptcy is only being pushed back by 30 days or so.

  • avatar

    I wish my work would pay my salary for not doing anything, but I’m a contractor, not union, no work – no paycheck.

  • avatar

    And now, Baby Plucky:
    Saab go down the hooooolllle! Bye-Bye, Saab!
    *potty flush*

  • avatar
    Extra Credit

    I realize the money has not been deposited yet, but why on earth would the GEM Global Yield Fund want to throw any amount of money into the Saab abyss? Who among the B&B can shed some light on this “investment”?

    • 0 avatar

      It’s no “investment”, they buy shares for 90% percent of the average price for the coming 15 trading days.

      It works something like this:
      SWAN issues 5 million new shares to GEM
      GEM pays SWAN an X amount

      And then the 15 trading day long pricing period starts. They will take the average of the closing price of the SWAN share for a 15 day period. And GEM will only have to pay 90% of that average price for the shares.

      So it is in their interest when the share price goes down during the day. They can sell “high” during the day and by selling a lot of shares the price will go down and that low price will be used to calculate the average price that GEM had to pay.

      At the end of the 15 day pricing period GEM and SWAN will look at how much GEM prepaid at the beginning of the pricing period and the difference will be settled.

      GEM does a lot of these kind of transactions with companies like SWAN (aka dying companies).

      • 0 avatar
        Extra Credit

        @Its_Magic – Thank you. That makes perfect sense. I didn’t realize the pricing period started after the shares changed hands. I foolishly assumed the price was based on the preceding 15 days of trading.

  • avatar

    The Saab Soap continues…

    Secret new investor from the US! *woehoe*

    Party in Trollhattan, woehoe, Saab Up!

    Oh noes! Not true…
    Saab down again…

    PS White collar workers still don’t haven’t received their money.

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