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Saab can't pay employee wages

Loss-making Swedish carmaker Saab said on Thursday it couldn't pay its employees wages as it had not obtained the short-term funding it needs.

The IF Metall and Unionen groups at Saab, which has made losses for the last two decades, said they would send a formal demand for payment on Monday if their members had not received their wages by then.

"Then the company has seven days to react," IF Metall representative Veli-Pekka Saikkala told Reuters.

"After that there are two alternatives. Either we see that the situation can be solved, or we demand that Saab is put into bankruptcy."

Production at Saab, owned by Netherlands-based Swedish Automobile, has been halted for most of April and May and is currently down for at least the next week because it doesn't have the money to pay suppliers for parts.

Shares in Swedish Automobile, which itself has never made a profit since starting operations in 2000 under the name Spyker, had plunged 29 percent to 1.751 euros. It bought Saab from General Motors in early 2010 but fell far short of its first-year sales targets, leading to the escalating cash crisis.

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Swedish Automobile this month agreed a rescue package for Saab from two Chinese car companies, Zhejiang Youngman Lotus Automobile Co and Pangda that would solve longer-term financing problems if approved by authorities in China and Europe, but those deals do not provide for its short-term cash requirements.

Swedish Automobile said in a statement it was in talks with various parties including current financiers to resolve the cash crunch, including via a sale and leaseback of Saab's factory.

"There can, however, be no assurance these discussions will be successful or that the necessary funding will be obtained," it said.

Analyst Martin Crum at Dutch broker AEK said a bankruptcy was still possible for Saab.

"The company is in a downward spiral. The longer it takes, the tougher it gets. The longer it takes, the more potential buyers will leave," he said.

Saab spokeswoman Gunilla Gustavs said it was not possible to say when salaries would be paid. "That depends on when and if we can secure short-term funding, for example through the real estate deal.

"This is really bad news, and we are working intensely to do something about it. There are no guarantees, but we are not giving up," she said. "There's no talk of laying off employees."

Earlier this week Saab made a payment offer to suppliers in an effort to get production going again.

The chairman of Sweden's association of car industry suppliers Christer Palm said many suppliers seemed willing to accept the deal, which he said entailed payment of 10 percent of outstanding debt at the restart of production as a first step toward full repayment.

The Swedish government declined to comment.

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