Winter is coming, and it may be a brutal one for Saab employees. As our colleagues at Motor Authority report, the struggling automaker is laying off up to 200 workers while it attempts to restructure and secure funding to resume production.
RECENTLY, ON THE SAGA OF SAAB...
Early last month, a supplier tried to have Saab's parent company, National Electric Vehicle Sweden, hurled into bankruptcy court to liquidate NEVS' assets and force the company to pay its debts. NEVS promised that it was trying to compensate creditors and begged for more time. The supplier withdrew its request.
Within weeks though, even NEVS realized that arranging financing deals with new partners was going to take longer than expected -- a lot longer. And so, NEVS took a deep breath, picked up its balance sheets, and walked right into bankruptcy court of its own accord.
Meanwhile, NEVS' debts have continued to mount. Last time we checked, the company had losses of over $86 million; it owed its sole backer, China-based National Modern Energy, over $163 million; and it had outstanding debts of more than $57 million. Sadly, it hasn't been doing much to pay off that debt, because Saab production stopped in May, after just six month of the brand's re-launch.
On the Saab website, a new post has appeared that's unusually level-headed for a company that once vowed to sell 120,000 cars a year by 2016. The most important bit comes in the first sentence: "Nevs announces intention to lay off up to 200 employees due to lack of work, as the decision to re-start production will be further delayed". Further down the page, we learn the reason for that delay:
"The ongoing discussions on collaboration and ownership structure, which has not yet resulted in a binding agreement, indicates that the decision for a start-up of production will take time."
So, not only are up to 200 pink slips are being signed, sealed, and delivered to Saab employees, but it's also clear that little/no progress has been made on securing additional backers for beleaguered NEVS.
That second bit isn't too shocking. In fact, it seems par for the course: ultimately, Japan's Sun Investments -- National Modern Energy's big partner in the whole NEVS undertaking -- never signed on the dotted line, leaving National Modern to go it alone with NEVS. The company has been struggling every since.
As far as we know, NEVS plans to create a subsidiary that will take ownership of Saab's new Phoenix platform, then sell half of that subsidiary to one of two potential investors that NEVS has been negotiating with for many months. The company feels certain that proceeds from that investment will be enough to pay off debts and fire up Saab's production lines.
In the meantime, though, NEVS is having to keep a lot of balls in the air. It's having to pay Saab staff (though obviously, payroll will get a lot lighter soon); it's having to woo potential investors (which isn't easy to do when said investors know that NEVS is desperate for cash); and it's having to work its way through bankruptcy/restructuring in such a way that it satisfies creditors but doesn't scare off any of the aforementioned investors.
That's not an easy task. We wish the company luck.