STOCKHOLM: Sweden on Thursday, July 7 approved struggling carmaker Saab's €28 million (RM120.73 million) property sale and leaseback deal helping to ease a cash crunch at the firm that has forced it to stop production for months.

Saab, owned by Netherlands-based Swedish Automobile, has been scrambling for short-term funding since early April when suppliers pulled the plug on deliveries.

"The government will approve Saab's property deal," industry ministry spokesman Hakan Lind said.

A green light from the government follows approvals by the Swedish Debt Office and the European Investment Bank (EIB) in recent days.

All three had to give the go-ahead under the terms of a loan agreement Saab has with the EIB.

Saab has agreed around €66 million in short-term funding in the last two weeks, but the company still has not reached an agreement with its suppliers about paying its debts and production remains at a standstill.

"The discussions are going very well, but we can't give any timing predictions yet," Saab spokeswoman Gunilla Gustavs said.

Swedish Automobile said on June 29 it hoped to restart production within two weeks.

However, Christer Palm, chairman of the FKG suppliers' organisation, said he was sceptical Saab would restart production again before a scheduled, two-week summer break beginning on July 25.

"I don't believe production will get going because quite simply they can't get deals with all their suppliers in time," Palm told Reuters.

"Then, the deals with Pangda and Youngman above all must, of course, be approved by all the authorities so they can be able to pay suppliers in the long term."

The property deal, with a consortium of Swedish real estate investors led by Hemfosa Fastigheter, is one of several measures Saab has taken recently to bolster its coffers in the short term.

Chinese car distributor Pangda and carmaker Zhejiang Youngman Lotus Automobile Co this week pledged to buy a majority stake in the iconic Swedish brand.

They also welcomed interest from Russian financier Vladimir Antonov in taking a stake.

These agreements, which should secure Saab's long-term funding, still need to be approved by Chinese regulatory authorities, Sweden, former owner General Motors and the European Investment Bank.

Shares in Swedish Automobile were unchanged at €2.84 as 0828 GMT. — Reuters

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