Teetering on the brink of oblivion, Saab announced that it just received 70 million euro from a Chinese partner, according to Wall Street Journal news sources just minutes ago. It's the first payment in a badly needed restructuring loan deal intended to keep the Swedish automaker afloat.
Court officials were talking just days ago of the high likelihood of the automaker falling into bankruptcy and while the 70 million will get used up fast, it gives the car maker the ability to stave off creditors for now - and maybe just long enough to get the rest of its reorganization funding in order.
WSJ reported that "Saab Automobile needs the money to pay wages as Sweden's state wage guarantee—an insurance scheme providing salaries for employees of companies who are either bankrupt or undergoing a restructure—runs out on Oct. 21." Without the loan, Saab would have completely run out of time just days from now.
The Swedish factory for Saab has been closed for over 5 months while corporate officials sought loans and white knight buyout help from Russian and Chinese companies that often were promised but never materialized in the bank accounts. The 70 million just received is from a Chinese company that promises more if their government lets them - and that effort is still winding its way through Chinese red tape.
Whether the US made the right move, with its billions in taxpayer bailout money to US carmakers, or the Swedes have it right by turning a cold shoulder to Saab - only time will tell. The one thing we do know is that but for the bailout, the entire US economy would have been plunged into chaos with the auto company failures coming in the midst of the financial mess that investment bankers were brewing on Wall Street.
No question the US economy is heavily dependent on the auto industry. Meanwhile, in Sweden the economy is more broadly based on a variety of industries and technologies - even though their livelihood depends on exports of their goods and services more than imports. Out of the top 20 corporations in Sweden, only Volvo is known for its motor vehicle manufacturing. They build, sell, and do other things to keep their economy going.
Granted Sweden has its minuses - a tax rate double the US rate, for one - but it is also one of the top places for new business opportunities according to many economists too.
Perhaps the US economy came to depend too much on the auto industry, unlike Sweden where the auto industry isn't the only thing impacting the daily lives of the public in so major a way.
Regardless, we're glad to see Saab get by for now. Lemon lawyers didn't get many Saab cases and their quality - and customer loyalty - was probably the reason.
Burdge Law Office
Because life is too short to drive a lemon