Saab Bankruptcy Filing
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STOCKHOLM — General Motors Corp.'s Swedish-based subsidiary Saab went into court protection from creditors Friday so the unit can be spun off or sold by its struggling U.S. parent, officials said.
The move is a last-ditch effort to get Saab in order for sale, but the danger of a collapse still hovers over the ailing brand because neither GM nor the Swedish government appears ready to provide enough money to keep it going as a freestanding entity.
An application to reorganize the brand was filed at a district court in Vanersborg, in southwestern Sweden, Saab spokeswoman Margareta Hogstrom said. It was approved later Friday.
GM, which is seeking help from the U.S. government to avoid bankruptcy at home, hopes the three-month reorganization process will put the Swedish brand into shape for a sale, GM spokesman Chris Preuss said. "We fully intend to be out of Saab by the end of the year," he said.
Preuss said $1 billion was needed to keep the company running, of which GM was ready to pay $400 million. The U.S. automaker had asked the Swedish government to guarantee the rest, but "the guarantees have not materialized," he added.
The Swedish government, which insists that Saab's survival is GM's responsibility, rejected the request because GM's business plan wasn't "realistic," Industry Minister Maud Olofsson told The Associated Press on Friday.
"I spoke to GM today and told them that 'you have to go through this and present a credible and sustainable alternative,'" she said after a news conference in Stockholm. "For that, more capital is needed. GM or someone else needs to provide that capital."
Managing Director Jan Ake Jonsson, said Saab Automobile would be recreated as an independent unit, adding it wouldn't be easy.
"Many have already suffered considerably as a result of the crisis in the automobile industry and sacrifices will be a part of our future, but after a period of tough decisions we will have laid the foundations for a new beginning," he said in a statement.
The move would give Saab protection from creditors while it restructures in a process somewhat similar to Chapter 11 bankruptcy in the U.S. Under Swedish law, a company that files for reorganization is protected from bankruptcy during the process and cannot pay debt acquired before the filing.
GM said in a statement that Saab would continue operating normally. Detroit-based GM said it would make sure suppliers are paid so they keep shipping. "GM is fully committed to maintaining a viable and successful local and global supplier base during the Saab reorganization," Bo Andersson, GM group vice president for purchasing, said in a statement.
Saab said it would seek funding "from both public and private sources" to keep the company afloat. With three new models ready for launch in the next 18 months _ the 9-5, 9-3X and 9-4X _ managing director Jonsson said Saab has "an excellent foundation" to grow, assuming it can get funding for engineering, tooling and launch costs.
"Reorganization will give us time and means that help these products to market while minimizing the liquidity impact of Saab on GM," Jonsson said.
In its own restructuring plan, GM said Tuesday it would need up to $30 billion from the U.S. Treasury Department, up from a previous estimate of $18 billion and including $13.4 billion it has already received. It also said it would need to cut 47,000 jobs worldwide and close five more U.S. factories. GM said it needed about $6 billion in support from the governments of Canada, Germany, Britain, Sweden and Thailand to provide liquidity for its overseas operations in those countries.
Saab has around 4,500 workers, mostly in Sweden.
Analysts said Saab was too small to survive on its own in the beleaguered auto market. If the reorganization is successful, potential buyers could include Chinese automakers like FAW Group Corp., Shanghai Automotive Industry and Dongfeng Motor Corp., said Matts Carlsson, of Goteborg Management Institute.
Stephen Pope, chief global markets strategist for Cantor Fitzgerald, said the brand had suffered under GM's ownership.
"The really sad thing about Saab is that in the 1980s when yuppies were looking for a flashy, fast and stylish ride, Saab was mentioned in the same breath as BMW and Mercedes Benz," he said. "There's nothing special about them anymore."
Originally an aircraft maker, Saab started manufacturing cars after World War II. General Motors bought a 50 percent stake and management control of Saab Automobile in 1989 and gained full ownership in 2000. The aircraft division remains a different company.
GM's other European brands are Opel in Germany and Vauxhall in Britain. GM also markets its Chevrolet brand in Europe.
German officials have indicated that they are willing to help keep open Opel plants, but are insisting that the company outline a long-term plan for the division first.
Economy Ministry spokesman Steffen Moritz said in Berlin Friday that the automaker is expected to produce that concept "by the end of next week."
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Associated Press Writers Louise Nordstrom and Stephan Nasstrom in Stockholm and Geir Moulson in Berlin contributed to this report.
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KARL RITTER 02/20/09 12:47 PM ET Associated Press