Saab files for reorganization, seeks $1 billion to surviveFri, 20 Feb 2009 00:00:00 -0800
Saab is seeking $1 billion (793 million euros) to be self-financing, the company said on Friday after it filed for reorganization under a self-managed Swedish court process.
The General Motors-owned Swedish brand said it will work "to create an independent business entity" and will concentrate production, design and engineering in Sweden.
Saab said it would continue to operate as normal during the reorganization process, with GM and the Swedish government providing some support.
Saab Managing Director Jan-Ake Jonsson said: "We explored and will continue to explore all available options for funding and/or selling Saab. It was determined a formal reorganization would be the best way to create a truly independent entity that is ready for investment."
Saab's application for reorganization was filed with the Swedish district court in Vanersborg. Under the procedures, the court appoints an administrator to review Saab and its business plans.
The application was approved Friday by a Swedish district court in Vanersborg, Reuters said. The court has appointed an administrator as a first step in a legal process under which an insolvent company can restructure its business and renegotiate terms with creditors.
In documents submitted to the Swedish court Friday, Saab estimates that it lost about $340 million (3 billion crowns) last year.
"The current outlook for 2009 suggests a similar level of losses and associated funding requirements," Saab said in the documents.
The company said GM had notified the company that it would not fund further projected losses at Saab, but that it would provide liquidity for the company to pursue a reorganization.
GM Europe's head of communications, Chris Preuss, said GM was prepared to provide some funding for Saab but the brand needed outside money as well.
He said: "GM has put a substantial amount of money on the table to sustain Saab's operations and to launch the products that are in the pipeline. We have asked the Swedish government for loan guarantees for $600 million to give Saab a balance sheet as an independent unit which will allow it to continue."
Preuss said funding for Saab is still intact. "We just need to see how funding can be secured from either government or private sources during the restructuring process," Preuss told Automotive News Europe.
GM's support would also extend to the development costs and tooling for the new 9-5, 9-4X and 9-3X, which will launch in the next 18 months.
GM will also continue to provide technical support to Saab in the future and provide parts through licensing agreements, Preuss said, but there were limits to the support GM would provide.
Preuss said: "(GM President) Fritz Henderson made it very clear that GM will be out of Saab one way or another by the end of this year."
Saab has applied for $628.4 million (500 million euros) from the European Investment Bank, which is the long-term lending arm of the European Union. The company also is trying to raise more funds from GM as well as from public and private sources.
Jonsson said reorganization will allow Saab to launch new models while minimizing the brand's liquidity impact on GM.
"With a new 9-5, 9-3X and 9-4X all ready for launch over the next year and a half, Saab has an excellent foundation for strong growth, assuming we can get the funding to complete engineering, tooling and manage launch costs," he said in a statement.
Earlier this week, the Swedish government said it is not prepared to take over Saab after GM said it planned to shed the brand quickly as part of its restructuring efforts.
GM bought half of Saab in 1990 and took full control in 2000. The brand has made a profit only in one year during GM's ownership.
Last year, Saab's global sales fell 25.5 percent to 93,338 units
Industry insiders said there has been a greater interest from outside investors in Saab since GM's announcement that it was looking to offload the brand.
Saab employs some 4,000 people in Sweden, mainly at its plant in Trollh
By John Revill- Automotive News Europe