Ailing Swedish carmaker Saab sought breathing space from creditors today, filing with a local court for bankruptcy protection through a "voluntary reorganisation" while it continues to wait for promised new investments from two Chinese firms.
Saab, rescued from closure by General Motors in early 2010 by Amsterdam-listed Spyker Cars - later renamed Swedish Automobile (Swan) - has struggled for several months while it pursues funding from an assortment of Chinese and other investors.
Production at its Swedish plant has been at an almost continuous standstill since April as suppliers refused to provide parts until they received payment. The company also failed to pay salaries in August.
In June, Saab said two Chinese car companies, Pangda Automobile and Zhejiang Youngman Lotus Automobil, had agreed to take a combined majority stake in the firm aimed at rescuing the struggling Swedish carmaker. The deals are still awaiting approval from the Chinese authorities.
"The eventual purpose of the proposed voluntary reorganisation process is to secure short-term stability while simultaneously attracting additional funding, pending the inflow of the equity contributions of Pang Da and Youngman," Swan said in a statement today.
But the Chinese authorities have halted planned investments in the past, such as Saab's failed deal with Hawtai Motor Group in May and Sichuan Tengzhong Heavy Industrial machinery's bid for GM's Hummer, which collapsed in 2010.
Swedish newspaper Dagens Industri said yesterday that Youngman would not get the necessary Chinese official approval to take part in the deal, citing several sources.
Instead, state-owned Beijing Automotive Industry Holdings or sport utility vehicle maker Great Wall Motor, were seen by Chinese officials as being more suitable partners, the newspaper said.
A source told Reuters in May that Great Wall had been talking with Saab's owner about a possible tie-up.
Swan said that under the filing for voluntary reorganisation, Saab Automobile and two subsidiaries were asking the Swedish court to appoint an administrator with whom management would work to reorganise the company.
Saab said it will present the reorganisation plan to creditors within three weeks of filing the reorganisation plan.
Saab entered this same process in 2009 after GM pulled its funding and it exited later that year.
According to Saab's annual report, the company paid 1.9 billion crowns ($290 million) in wages, social contributions and pensions for 3,208 employees in 2010.
On that basis, the company had to pay out around 157 million crowns ($24 million) in staff costs each month last year. Saab now has around 3,640 employees.
The reorganisation plan aims to lower costs and create a "viable, competitive and independent organisation", Swedish Automobile said.
Saab asked for the court-appointed administrator to be the same lawyer who handled the 2009 Saab reorganisation.
The administrator will apply for a Swedish state wage guarantee scheme to cover Saab's wages, Swedish Automobile said.
Trade in Swedish Automobile's shares has been suspended and the stock will be put on a watch list if Saab's court request is approved, Dutch market authority AFM said in two separate statements.
Reuters