Saab files for bankruptcy protection

 

The group’s owner, Amsterdam-listed Swedish Automobile (Swan), formerly known as Spyker Cars, said on Wednesday that its Saab Automobile unit would file for voluntary reorganisation at 9am central European time with the district court in Vänersborg, Sweden.

“Swan and Saab Automobile are of the opinion that, considering Saab Automobile’s current limited financial resources, a voluntary reorganisation will entail the best preconditions for using existing resources in the most efficient way” the Dutch company said.

Saab’s owners had been trying to raise short-term financing to tide the ailing brand over pending Chinese government approval of a €245m deal agreed with two companies, Pang Da and Youngman, to distribute its cars in China.

Swedish Automobile said on Wednesday: “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.”

The move marks the second time in less than three years that Saab has been in Swedish bankruptcy court. It filed for reorganisation in 2009 after General Motors, its then-owner, was itself preparing to file for bankruptcy in the US, and cut off the Swedish brand financially in a bid to prepare it for sale to outside investors.

GM then entered long-running sales talks to sell Saab, first to Swedish supercar producer Koenigsegg then, when that deal fell apart, to Netherlands-based Spyker, itself formerly a small-volume producer of expensive cars.

However, Saab’s new owners struggled to establish it as a standalone business, and in February sold their own supercar business to keep the new acquisition afloat.

Saab’s bankruptcy filing had long been expected. Swedish Automobile reported a net loss of €224m for the six months to end-June, and its balance sheet showed negative equity of €397m at the end of the first half, a figure that exceeded its sales of €359m during the period.

In June the struggling carmaker mortgaged its plant in a €28m deal to sell and lease back its property, after running out of cash to pay its workers. It has also struggled to pay suppliers, and made no cars since June 9.

Saab said it would present a detailed reorganisation plan to creditors within three weeks of the filing, although that period might be extended by the court.

After court approval, the carmaker’s reorganisation will be executed over another three months, up to a total of 12 additional months.

The bankruptcy filing, Saab’s owners said, would allow the carmaker to pay suppliers and workers and undertake “an orderly restart of production”.

They said that they had secured funding to emerge from bankruptcy through the agreements with Pang Da and Youngman announced in July. However, the car brand noted, these agreements are “subject to obtaining certain approvals”.

Chinese companies require government approval for overseas investments. Automotive analysts in China have expressed scepticism that Beijing would sign off on the two companies’ proposed deal with Saab.

During the two decades in which GM owned Saab, it failed to make the brand profitable. According to Swedish Automobile’s first-half accounts, the carmaker produced fewer than 13,000 cars in January to June.

 

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