SAAB Files For Bankruptcy Protection in Sweden

Former GM division Saab Automobile filed for bankruptcy protection in Sweden yesterday after attempts to financially rescue the company failed.

GM, still a Saab supplier, vetoed the latest offer that might have led to financial resuscitation by Chinese automaker Zhejiang Youngman Lotus Automobile, and Saab’s current owner, Swedish Automobile N.V. (Swan), issued a statement signaling the end.

“After having received the recent position of GM on the contemplated transaction with Saab Automobile, Youngman informed Saab Automobile that the funding to continue and complete the reorganization of Saab Automobile could not be concluded,” said Swedish Automobile.

So with that, the board determined that enough was enough.

“The Board of Saab Automobile subsequently decided that the company without further funding will be insolvent and that filing bankruptcy is in the best interests of its creditors. It is expected that the Court will approve of the filing and appoint receivers for Saab Automobile very shortly,” the statement continued. “Swan does not expect to realize any value from its shares in Saab Automobile and will write off its interest in Saab Automobile completely.”

Sinking ship

Saab had separated from GM in February 2010 when the ailing parent company sold it off as part of bankruptcy proceedings.

Previously, GM had controlled Saab since it had acquired a 50-percent share in 1990, and full control in 2000.

Saab Auto had suspended production in March because it could not afford to pay suppliers. Its assembly lines have only infrequently operated since then.

The company owes back pay to workers from November, and had delayed payment several times prior.

It has about 3,600 employees, including 3,400 in Saab’s hometown of Trollhaettan, Sweden.

Saab’s global sales reached 133,000 vehicles in 2006, and have fallen precipitously in the last few years. The company sold 31,696 vehicles in 2010, missing a target of 50,000 to 60,000 vehicles.

As for the U.S., there are still 188 Saab dealers, and these have had to try for their share of sparse sales which through November rose 22 percent from a year earlier to 5,340.

The brand last saw its peak sales 25 years ago in 1986 when that year 48,181 vehicles were sold.

Saab Auto said yesterday it is too early to define its next steps with regard to its dealers.

In turn, U.S. dealers have begun to express concerns that they will be fairly compensated for losses they will incur due to Saab’s bankruptcy.

North American dealers have around 3,000 unsold new vehicles in inventory.

Rescue still possible?

Mats Faegerhag, Saab’s product development chief told Automotive News that there’s still a chance Saab could be saved if a “viable investor” comes forward.

“But that would have to happen quick, in a few weeks, because our employees will be looking for other jobs,” he said.

This statement echoed Swedish Automobile CEO Victor Muller who told a news conference that various interests could be interested in a clearance sale.

“There are parties out there that have expressed an interest to pursue a possible acquisition of Saab from bankruptcy,” Muller said.

It will now be the purview of court-appointed receivers in charge of overseeing the bankruptcy process to judge any offers.

Muller said also that GM had shown an unhelpful attitude from the middle of the year onward. Further, he said a court-appointed lawyer whose job it was to oversee Saab’s creditor protection process had reportedly undermined rescue efforts.

Faegerhag said Saab’s collapse may also hurt Swedish competitor Volvo Car Corp., which is owned by China’s Zhejiang Geely Holding Group Co.

He said suppliers to both manufacturers will be hobbled by Saab’s closure and may go out of business as well.

Source: GM-Volt.com