- The Washington Times - Saturday, February 21, 2009

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 conditioned for a 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 free-standing 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.

Mr. 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 said 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 would be recreated as an independent unit, and added that 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.

The move would give Saab protection from creditors while it restructures in a process 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 that Saab would continue operating normally. The Detroit-based automaker 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,” said Bo Andersson, GM group vice president for purchasing.

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 - Mr. Jonsson said Saab has “an excellent foundation” on which 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,” he said.

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