Saab Seeks Restructuring to Avoid Bankruptcy

Reorganization will include the concentration of design, engineering and manufacturing in Sweden

Saab Automobile sought legal restructuring on Feb. 20 to stave off bankruptcy after it was abandoned by its owner General Motors. "We submitted a request today" to the Vaenersborg district court in southwestern Sweden, Saab spokeswoman Margareta Hoegstroem said, adding the court was due to announce later today whether it accepted the request.

The move came after GM warned that Saab would have to file for bankruptcy protection "as early as this month" unless it received help from the Swedish government, which in turn flatly refused to step in and rescue the auto maker.

Restructuring would allow parts of Saab to survive and could enable suppliers, who would lose all the money owed them by the company if it filed for bankruptcy, to get some money back by agreeing to accept partial repayment.

GM said that the move was aimed at creating "a fully independent business entity that would be sustainable and suitable for investment."

The reorganization is a Swedish legal process headed by an independent administrator appointed by the court who would work closely with the Saab management team. "As part of the process, Saab will formulate its proposal for reorganization, which will include the concentration of design, engineering and manufacturing in Sweden," GM said.

If the court approves the restructuring, it would be executed over a three-month period and would "require independent funding to succeed," it said. Funding would be sought from both private and public sources, it added. The government would provide "some support" during the reorganisation period, according to GM.

"We explored and will continue to explore all available options for funding and/or selling Saab and it was determined a formal reorganization would be the best way to create a truly independent entity that is ready for investment," Saab managing director Jan Aake Jonsson said. Saab has three new models ready for launch over the next year and a half, he pointed out.

Saab employs about 4,100 people in Sweden, 3,700 of whom work in Trollhaettan.

Including suppliers, some 15,000 jobs in Sweden are believed to be at risk if the unit disappears. A crisis for the car supplier industry would also have negative effects on Sweden's other carmaker, Volvo, owned by Ford.

GM bought 50% of Saab in 1990 and acquired the rest 10 years later. But the Swedish company has registered chronic losses over the past 20 years.The brand, once renowned for its cutting-edge technology and futuristic designs, has in recent years suffered from an aging product line and plunging sales. In the fourth quarter last year, Saab's sales nosedived 38% to just 17,900 cars. For all of 2008, the Swedish automaker sold only 93,300 vehicles down from 120,000 just three years earlier.

Copyright Agence France-Presse, 2009

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