Automaker Saab Files For Bankruptcy In Sweden

Saab is giving up the struggle to stay in business after previous owner GM blocked takeover attempts by Chinese investors.

STOCKHOLM (AP) β€” Saab Automobile filed for bankruptcy on Monday, giving up a desperate struggle to stay in business after previous owner General Motors Co. blocked takeover attempts by Chinese investors.

Saab CEO Victor Muller personally handed in the bankruptcy application to a court in southwestern Sweden, ending his two-year effort to revive the carmaker that over more than six decades has become known for its rounded sedans and quirky design features.

The Dutch entrepreneur told reporters he had to pull the plug after GM, which still owns some technology licenses for Saab, rejected a last-ditch financing plan involving a Chinese company.

"That basically was the last nail in the coffin of this beautiful company," Muller said in webcast news conference at the Saab plant in Trollhattan, southwestern Sweden.

The Vanersborg District Court was expected to approve the application later Monday.

"This is the most unwelcome Christmas gift I could have imagined," said Fredrik Almqvist, 36, who has worked at Saab's assembly line for nearly 17 years.

While experts say the company is likely to be chopped up and sold in parts, local officials in the town of Trollhattan, where Saab employs more than 3,000 people, were holding out hope that a new buyer would emerge to salvage the brand.

"Our absolute hope is that the bankruptcy administrator will aim for a solution where the company is sold in its entirety," Trollhattan Mayor Paul Akerlund said in a statement.

Muller used his luxury sports car maker Spyker Cars to buy Saab from GM in 2010, promising to restore its Swedish identity, but the company ran out of money just a year later.

Even as production stopped and salary payments were delayed, Muller fended off bankruptcy by selling the company's real estate and lining up financing deals with investors in Russia and China. He bought time by placing the company in a reconstruction process under bankruptcy protection.

But the deals fell through, blocked by regulators or by GM, which was concerned that its technology would end up in the hands of Chinese competitors.

The final Chinese suitor, Zhejiang Youngman Lotus Automobile Co., said it pulled out after the last proposal for a solution was rejected by GM over the weekend.

"We were supporting them to the last moment, even up to 1 a.m. this morning we were discussing possible solutions by telephone, but due to GM's position, in the end Sweden's Saab filed for bankruptcy this morning," said Rachel Pang, an executive director of a subsidiary company of Youngman and daughter of Youngman's founder, Pang Qingnian.

Muller blamed the former administrator of Saab's reconstruction, Guy Lofalk, for the collapse of the talks, saying Lofalk had led the Chinese investors to believe they could become sole owners of the company. Muller said he knew that was impossible given GM's concerns about licenses.

"Until this problem arose the relationship with GM was excellent," Muller said.

Calls to Lofalk's office were not answered Monday.

Swedish lawyer and reconstruction expert Peter Smedman said the prospects of selling Saab during bankruptcy proceedings would depend on GM.

"The licenses that GM has are crucial for the value of the company," Smedman said. "If GM doesn't want to let anyone in because they are scared of competition in China, then there is probably not much (value) left."

Originally an aircraft maker, Saab entered into the auto market after World War II with the first production of the two-stroke-engine Saab 92. It soon became a household name in Sweden and in the 1970's it released its first turbocharged model β€” the landmark Saab 99.

To auto enthusiasts, Saab was known for its quirks such as placing the ignition lock between the front seats and becoming the first car to have heated seating in 1971.

GM bought a 50 percent stake and management control of Saab in 1989, and gained full ownership in 2000. The aircraft and defense company with the same name remained an independent entity, building fighter jets and weapons systems.

Saab Automobile's sales peaked at 133,000 cars in 2006. After that, sales dwindled to 93,000 cars in 2008 and just 27,000 in 2009, as GM β€” itself in bankruptcy protection following the financial crisis β€” prepared to wind down the Swedish brand.

Muller stepped in after a takeover attempt by a consortium led by Swedish sports car maker Koenigsegg failed. Analysts expressed doubt over Saab's chances of survival under Spyker, which later changed its name to Swedish Automobile.

Spyker manufactured only a few dozen high-priced cars a year. Without support from other investors, Muller's plans didn't seem credible, critics said.

Concerns mounted as Saab failed to pay suppliers early this year. Production was stopped in March, restarted, then halted again as the liquidity crisis deepened.


AP Business Writer Elaine Kurtenbach in Shanghai contributed to this report.

GM 'cannot support' plans to save Saab 

By Louise Nordstrom, Associated Press

STOCKHOLM (AP) β€” Bankruptcy proceedings remain on the cards for troubled Swedish car maker Saab after former owner General Motors Corp. said Saturday that proposals presented so far to salvage the troubled brand are unacceptable and won't be supported.

Trollhattan-based Saab, bought by Dutch group Swedish Automobile NV in 2010, faces a court-hearing Monday to determine whether it will exit bankruptcy protection.

That means that if Saab doesn't present a viable survival plan, bankruptcy proceedings are likely to start.

Due to its ailing finances, Saab's production has been idle for months and it has struggled to pay both suppliers and its 3,700 staff.

Earlier this year, Chinese companies Zhejiang Youngman Lotus Automobile Co. and Pang Da Automobile Trade Co. said they would buy the brand for euro100 million ($135 million), but the deal was blocked by GM amid concerns over the technology licenses and production contracts it has with Saab. Since then, the brand has worked on other, alternative solutions.

In an email to The Associated Press Saturday, GM spokesman Jim Cain said proposals presented so far are "not meaningfully different from what was originally proposed to General Motors and rejected."

In contrast to what Swedish Automobile's CEO Victor Muller has claimed, Cain added that GM's consent is required for Saab to move forward. A consent he said would be unlikely.

"Each proposal results either directly or indirectly in the transfer of control and, or ownership of the company in a manner that would be detrimental to GM and its shareholders," he wrote. "As such, GM cannot support any of these proposed alternatives."

Saab did not return calls seeking comment Saturday, but Muller told Swedish daily Svenska Dagbladet that GM"has no say about a plan that means that Youngman would receive zero percent of the shares in Saab."

Further, he said that GM's statement was "obviously" based on rumors, trying to "influence Monday's court-hearing in a negative way."

Saab entered bankruptcy protection in September after a court gave it three months to reorganize and solve a severe liquidity crisis.

Earlier this month, however, the automaker's court-appointed administrator applied for the process to end because he said there wasn't enough bridge-financing to cover the costs during the reorganization and that there wasn't enough time to find a financing solution that GM would accept.

He added that GM's categorical rejections have made a near-term solution impossible, even though he considers that Saab, and its owner, have stayed within the framework of the demands set out in the existing contracts with GM.

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