Business

Saab says cannot pay employee wages

The doors open upwards from a new Saab concept car
Image caption Saab's troubles have not stopped it unveiling new concept cars

Swedish carmaker Saab has said it does not have enough money to pay its employees' wages.

Owner Swedish Automobile said it was in discussions with lenders to try and obtain short-term funding.

Earlier this month, the company said it had reached a deal with two Chinese firms to invest a total of 245m euros ($350m; £218m) in the company.

Production at Saab's main plant in Sweden is currently on hold after it was unable to pay suppliers.

"Swedish Automobile and Saab Automobile are in discussions with various parties to obtain short-term funding, including via the sale and lease-back of the real estate of Saab that was announced previously, and with their financiers in connection with current financing arrangements," the company said in a statement.

However, it gave no assurances that it would be able to obtain the funding needed to pay wages.

Swedish Automobile, formerly known as Spyker Cars, bought Saab last year from General Motors following major restructuring at the US car giant.

The company is still struggling, however, selling only about 30,000 cars last year.

Chinese hope

Saab is hoping that the provisional deal struck with the two Chinese investors will help solve its longer-term financial difficulties.

Under the non-binding deal, Zhejian Youngman Lotus Automobile would invest 136m euros for a 29.9% stake, while Pang Da Automobile would increase its investment to 109m euros, retaining its previously-agreed 24% stake.

However, the deal needs approval from Chinese and European regulators and the European Investment Bank.

If the agreement does go through, both Swedish carmakers would have Chinese ownership.

Volvo was bought by Zhejiang Geely Holding Group in August 2010.

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