Loss-making Nordic carmaker Saab's fight for survival moved up a gear on Friday as the General Motors unit won protection from creditors while it tries to find a new partner and raise fresh funds.
GM, which itself faces mountainous debts and a future that hangs in the balance, refuses to continue funding Saab's losses. In a plan submitted to the U.S. Treasury this week, GM said the Swedish firm would become an independent business as of January 1, 2010.
Saab said it made a loss of about 3 billion crowns ($340 million) in 2008, according to documents filed with the Swedish court that granted the company a stay of execution. It expects a similar loss this year, blaming slack demand, aging products, overcapacity and high costs.
The company said it needed a rapid restructuring in order to address the level of near-term losses and new funding from either private or public sources to launch more competitive models, and that it had to find a new partner.
We explored and will continue to explore all available options for funding and/or selling Saab, Saab Managing Director Jan-Ake Jonsson said in a statement.
Any restructuring would need the approval of Saab's creditors, who will meet on April 6.
In its court filing, Saab said GM has said it would not fund further the projected losses, but would provide liquidity while the company restructures. It was not immediately clear whether GM would cover this year's projected loss.
Swedish daily Dagens Industri said on Friday that GM is prepared to pump in $400 million into Saab if the Swedish state guarantees a further loan of $590 million.
The funding package would target annual sales of 120,000-130,000 vehicles and a profit in 2011 or 2012, the newspaper said, quoting unnamed sources. The firm sold just over 93,000 cars in 2008.
Many analysts believe such sums would be far too little to turn Saab around, and question whether the brand has a realistic future.
Sweden said late last year it would provide its vehicle industry with up to 25 billion crowns in aid to help it through the current global crisis.
The government said this week its talks with GM over state aid for Saab lacked a realistic basis, but a senior Swedish official told Reuters on Friday the state had not closed the door to providing loan guarantees to the carmaker.
That will depend on what the plans look like, said Joran Hagglund, state secretary at the Swedish Industry Ministry.
If you provide loan guarantees to someone, you must be sure the company has a future.
Saab and rival car firm Volvo have helped shape Sweden's image abroad with their focus on safety, family motoring and high engineering standards.
However, the current economic crisis has plunged the auto industry worldwide into crisis, adding to problems for carmakers in countries with high production costs like Sweden.
Volvo Cars has been put up for sale by owner Ford Motor Co..
Saab and Volvo employ more than 20,000 people in Sweden with thousands more jobs at suppliers tied to the two companies.
(Additional reporting by Johan Ahlander and Love Liman; writing by Simon Johnson; Editing by Will Waterman, Simon Jessop, John Stonestreet)