Saab To File for Reconstruction, Swedish Report SaysBy Michelle Krebs February 19, 2009
By Michelle Krebs
DETROIT -- Saab Automobile AB will file for reconstruction -- the U.S. equivalent of Chapter 11 reorganization -- at a board meeting at 11 a.m. local time in Sweden, a newspaper there is reporting.
Spokesmen from General Motors, Saab's parent, and Saab declined to comment to AutoObserver Thursday morning, saying they had nothing more to say about Saab than what was in GM's viability plan submitted to the U.S. government on Tuesday.
Saab's plan to file for reconstruction as well as end payments to suppliers was first reported by the highly respected Dagens Industri, Sweden's equivalent of the Wall Street Journal. The paper, citing unnamed sources, said GM's request for a capital injection into Saab by the Swedish government was unsuccessful.
As part of its report to the government filed Tuesday, GM confirmed it was negotiating with the Swedish government to help finance Saab until a buyer could be found and that GM had capped the amount it would invest in Saab. GM reportedly was seeking $600 million in loan guarantees from the Swedish government.
Sweden soundly rejected GM's request, saying it was up to the American automaker to save its money-losing brand. Sweden's Industry Minister Maud Olofsson was quoted as saying:
"I'm deeply disappointed in General Motors. They have in practice removed their hand from Saab.... Instead they are handing over responsibility to Swedish taxpayers."
Tuesday at the automaker's press conference, GM CEO Rick Wagoner warned, with regard to the GM's viability plan, Saab likely would be forced to file for bankruptcy if a buyer or funding were not found.
Finding a buyer is likely Saab's only chance for survival though that is easier said than done, with other automakers struggling as well and the tight credit markets making it nearly impossible to find funding for acquisitions. Ford also has its Swedish brand, Volvo, on the auction block.
Like Chapter 11 reorganization under the U.S. bankruptcy code, restructuring in Sweden could allow parts of Saab to survive. It also might enable suppliers to receive at least partial payment. Under a full bankruptcy, they could lose all the money owed to them.
Saab's board was set to meet on Thursday morning and was planning to request that an administrator be appointed by a court to restructure Saab and determine if any parts of it can survive independently, Swedish public radio reported.
Sweden's Olofsson told Swedish media late Wednesday that a company reorganization was "the most realistic path."
"This could offer possibilities to develop the parts of Saab that are very good," she said. But, she added, "the Swedish state and taxpayers will not own car plants," a message she conveyed to GM during negotiations.
As many as 25,000 to 30,000 jobs are directly or indirectly linked to Saab, Dagens Industri reported. Saab employs about 4,000 people in Sweden, mostly in the city of Trollhatten, where its plants are located.