Saab Cars looks to continue parts sale business, use Caterpillar cash

By Caroline Salls

Pittsburgh, April 12 - Saab Cars North America, Inc. requested court approval to continue its parts sale business and to use cash collateral in connection with an interim parts agreement with Caterpillar Logistics Services LLC, according to a Wednesday filing with the U.S. Bankruptcy Court for the District of Delaware.

Saab said Caterpillar Logistics has provided integrated logistics services under an amended agreement in connection with the warehousing and sale of the company's parts inventory.

In addition, Saab said it entered into a security agreement with Caterpillar Logistics.

Under an amendment to the security agreement and an interim inventory services agreement, Saab said it agreed to the terms and conditions for the continued sale of the parts inventory.

Those terms and conditions include:

• The creation of a parts escrow account that would serve as a depository for dealer parts prepayments, which would remain the property of the dealer until its parts order was shipped and completed by Caterpillar Logistics;

• Payments of outstanding and current monthly fees and expenses to Caterpillar Logistics from a parts escrow account, as well as a cash collateral share weekly payment to Saab for services and expenses in managing the parts business that began at $18,320 and was increased to $100,000 a week to enable the company to cover Chapter 11 administration expenses;

• The grant of a security interest in Saab's intransit parts inventory and proceeds to Caterpillar Logistics as additional collateral for Saab's obligations under the logistic services agreement and interim parts agreement and as an incentive for Caterpillar Logistics to pay the costs of transporting the inventory to its warehouse from a U.S. port; and

• The retention of surplus proceeds of parts sales in a parts escrow account as security for any Caterpillar Logistics debt allowed in Saab's Chapter 11 case, including an asserted $3.5 million termination claim.

According to the motion, the term of the interim parts agreement is set to expire on April 27. The parties are negotiating an extension of that term to May 30.

A hearing is scheduled for May 2.

Saab AB is a Trollhattan, Sweden-based car manufacturer. Subsidiary Saab Cars North America is based in Royal Oak, Mich. An involuntary bankruptcy case was filed against Saab Cars North America on Jan. 30. Its Chapter 11 case number is 12-10344.

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