Spyker, Saab defend financial position

Dow Jones Newswires - Executives from Spyker NV (SPYKR.AE) and Saab Automobile Monday sought to calm fears the Swedish auto maker could be at risk financially, saying it was on the verge of securing its financial future and supply disruptions which caused production halts last week were merely a glitch.

Spyker Chief Executive and Saab Chairman Victor Muller said reports that Saab was in financial difficulty were out of proportion and the production disturbances were "a small glitch."

"Saab is not on the verge of collapse," he said at a press gathering in Stockholm at which Saab presented new car models.

Saab owner Spyker was hit by a raft of bad news in recent weeks: The company revealed a big loss for 2010 and said it had failed to meet its production targets; Saab Automobile CEO Jan-Ake Jonsson announced his retirement and the incoming Chief Financial Officer said he decided not to join; Spyker had to raise new funds by selling its sports car business and raising new capital from shareholders; Muller was called in by the Swedish debt office to provide assurances over collateral to meet the terms of the credit guarantees the government provided to secure EUR400 million of European Investment Bank funding; and Saab production was halted several times last week as suppliers halted shipments due to unpaid bills.

In Spyker's annual report, released Friday, the Dutch company admitted its funding situation was tight as Saab continued to burn cash faster than expected, and it warned that the Swedish auto maker's future was in doubt if it couldn't secure additional financing. 

Muller has said that the company is in talks to secure extra financing and he's confident that will happen. But how and from whom Spyker intends to get the required cash remains unclear.

Saab Automobile CEO Jan-Ake Jonsson Monday said that while the company had experienced problems last week, it was still close to the financial expectations set out in its business plan.

Jonsson, who has said he will retire in May after six years as CEO, reiterated that Saab is working on strengthening its financial position through additional input from its owners, credit, and through improvements in its operations.

"I see the situation improving shortly," Jonsson said.

Jonsson declined to comment on Saab's relationship with its more than 800 suppliers, but company spokesperson Eric Geers said last week that negotiations with some suppliers are still going on and that this could continue to affect production at Saab's Trollhattan plant.

Muller may get Russian investor and former Spyker shareholder Vladimir Antonov back on board to provide fresh funds. Antonov's involvement with the Dutch car maker was terminated last year at the insistence of General Motors Co. (GM) as a condition of its sale of Saab to Spyker. According to Muller, GM has now changed its mind regarding Antonov, but it is still unclear if Antonov will finance the repayment of the EIB loans.

"First we need to get him in then we can look at that sort of thing," Muller said.

GM wasn't immediately available to comment.

Muller has said that he is in talks with a number of banks on a EUR500 million loan. However, he said this money would be used mainly to repay the debt Spyker owes the EIB, which provided the cash to fund Saab's business plan.

Spyker's annual report revealed the size of Saab's financial needs. It had a cash outflow of EUR123 million last year and expects to have further cash outflow this year, while interest on borrowings last year was EUR40 million.

The Swedish debt office last week allowed Saab to draw more of its loan facility from the EIB, a sum that must be matched by an equal investment from Spyker. The EIB funds are for specific projects such as improving fuel efficiency, but Muller said the company can choose which project it wants to fund.

Muller said Monday that he wished Spyker had not given production forecasts for Saab, saying the company had been "hammered" for failing to meet the targets.

Spyker had expected to sell 50,000 Saab cars in 2010, but this target was lowered during the course of the year to 30,000 to 35,000 cars. It eventually sold 31,696 cars last year. Spyker has said it still expects to sell 80,000 cars in 2011 and 120,000 cars in 2012, which should allow the car maker to turn a profit.

"The business plan and reality are two different things. The business plan said we were going to make 50,000 cars last year. But we didn't," Muller said.

He added, however, that Saab had managed to lower its break even cost point and therefore remained within the business plan, "which was quite an achievement."

Muller declined to say how long the company can survive without fresh cash.

Antonov has voiced interest in providing financial support and said earlier this week that he applied to become an owner of Saab. The Swedish government still has to decide whether it will allow Antonov's Convers Group to become a shareholder and a decision is expected within a few weeks.

The Swedish government's decision will be based on recommendations from the debt office, which unlike GM, hasn't expressed any objections to Antonov as an owner.

Muller has said he could bring Antonov back on board without the permission of the Swedish government.