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, itself facing mountainous debts and an uncertain future, 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 lost 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 -- which has been making cars in the industrial town of Trollhatten in the southwest of the country since 1949 -- is one of Sweden's best-known brands.
However, it 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.
Surrounded by new and vintage Saabs in the company's museum showcasing its six decades of car making, Chief Executive Jan-Ake Jonsson said that making Saab increasingly independent of its U.S. parent would help it find external financing.
Even though we have not been actively searching for new partners, we have had many knocking on our door showing interest in Saab, he told a news conference.
I am very confident and I think we have a solid basis for solving this financing issue.
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.
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 global economic crisis, mainly in the shape of loan guarantees. Jonsson said Saab expected to be given access to the state funds.
We are waiting for a reply from the government, he said.
Swedish Industry Minister Maud Olofsson said the information received about Saab's situation on Friday was not enough for the Swedish government to provide the carmaker with loan guarantees.
We have had a discussion with GM today and I have told GM we have doubts about this business plan, she said.
GM must demonstrate how they planned to make Saab profitable and that they would contribute the resources needed for the Swedish company to launch new car models, she said.
These are questions that demand answers if they are looking for a guarantee from the state, she told a news conference.
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 such as 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.
People definitely view this as a better option than a bankruptcy, Saab worker Mats Roos said.
If you ask those who are inside right now, in the factory, they have a positive view on this.
Shares in Swedish auto industry suppliers fell sharply, however, on concern over possible fallout from Saab's woes. Autoliv, the world's biggest seat belt and airbag maker, fell nearly 6 percent.
Bearing firm SKF was down 3.3 percent. SKF said it had minimal exposure to Saab. But even if the firm is a small client, it is a valuable client and even small volumes are important, SKF spokesman Ingalill Ostman said. ($1=8.820 Swedish Crown) (Additional reporting by Johan Ahlander, Love Liman, Veronica Ek; writing by Simon Johnson and Niklas Pollard; Editing by Simon Jessop)