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Saab seeks protection from its creditors

Saab logo
Image caption Swedish Automobile is hoping to secure investment

Struggling Swedish carmaker Saab is seeking protection from its creditors.

The move should help its owner Swedish Automobile avoid being pushed into bankruptcy while trying to secure additional funding.

Saab had to suspend production in April when its suppliers stopped deliveries after not being paid. Its workers have also had their pay delayed for three months in a row.

Analysts suggested the continued uncertainty was damaging for the brand.

'Wounded animal'

It said it now intended to present a reorganisation plan to creditors within three weeks of filing it in a Swedish court.

Swedish Automobile chief executive Victor Muller told a press conference that it was the intention of the company to pay back all creditors in full - a total of 150m euros ($211m; £132m).

As a result, he said he was confident it would get their support.

He added that when the bankruptcy protection plan is approved by Swedish authorities, Saab's workers would be paid their August wages from the government's wage guarantee scheme.

However, car analyst Jay Nagley, of Red Spy Automotive, told the BBC that the future still looked bleak for Saab.

"I'm just amazed that Saab is still alive at this stage," he said.

"It is like a wounded animal. You think it is dead, but then it goes and twitches again."

Mr Nagley added: "The key issue is which motorist in their right mind in Europe or the US would choose to buy a Saab?

"Why would you risk buying an expensive new car if the manufacturer might not be around in three years time?"

Saab GB insists it is operating as normal in spite of the crisis in Sweden.

Delayed deals

Swedish Automobile, formerly called Spyker, bought Saab from US giant General Motors in January 2010.

Before the summer, Swedish Automobile announced that two Chinese firms would buy minority stakes in the company.

However, these deals have not yet had regulatory approval in either Sweden or China.

They also need to be approved by the European Investment Bank (EIB).

Under the agreements, Zhejian Youngman Lotus Automobile plans to pay 136m euros for a 29.9% stake, while Pang Da Automobile will pay 109m euros for 24%.

Mr Nagley added that he did not expect the Chinese government to give the two companies the go ahead.

"The Chinese government is concerned that its car industry is too fragmented," he said.

"It wants to see fewer, larger firms that can compete on the international stage. It doesn't want to see ambitious companies like these two buying a very small Swedish manufacturer."

Jonas Froberg, car correspondent at Swedish newspaper Svenska Dagbladet, agreed that there was no guarantee the Chinese authorities would back the deals.

"The deals not getting approval in China is the biggest nightmare for Victor Muller [the boss of Swedish Automobile]," he said.

"People in Sweden love Saab, and they hope it will continue. But many are pessimistic, and have become more so over the summer."

However, Mr Muller said he was "very confident" that Beijing would back the investment deals.

He added: "We felt that the most orderly and quiet way to do it, to bring some peace to this company, was to seek the protection of the court and to ensure that nothing could happen to Saab in the meantime."

Loss making

The EIB agreed to provide Spyker with loans totalling 400m euros when it bought Saab.

Image caption Production has been halted at Saab's factory in Trollhattan since April

However, the EIB funds are only being released in tranches, and the money has currently stopped because Saab is not meeting its performance criteria.

Saab sold just 30,000 vehicles in 2010, with analysts saying it needs to sell 120,000 just to break even.

The carmaker, which employs about 3,700 people, was able to sustain these losses under GM's ownership, but its then US owner also starved Saab of the required investment to extend its product range.

Mr Nagley added that it was difficult to ultimately see anyone buying the Saab company, or even just the brand name.

"The brand is tarnished, and the company doesn't own any of its own technology - all the cars are based on GM Opels," he said.

"It is estimated that it would cost more than 1bn euros to put Saab on a sound footing, and I can't see even a Chinese company being prepared to pay that."

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