Saab on brink of closing after GM rejects rescue plan

Saab Automobile filed for bankruptcy on Monday and is on the brink of shutting for good after former owner General Motors rejected a rescue plan.

The move sets the scene for the end of Saab's struggle to survive after months of hastily drawn-up deals for a company that hasn't made a vehicle in months. The latest plan involved Chinese automaker Zhejiang Youngman Lotus Automobile, but this was vetoed by GM, still a key Saab supplier, over the weekend

"After having received the recent position of GM on the contemplated transaction with Saab Automobile, Youngman informed Saab Automobile that the funding to continue and complete the reorganization of Saab Automobile could not be concluded," Saab's Dutch owner, Swedish Automobile, said in a statement.

"The Board of Saab Automobile subsequently decided that the company without further funding will be insolvent and that filing bankruptcy is in the best interests of its creditors."

It expected the court shortly to approve the filing and appoint receivers. Swedish Automobile "does not expect to realize any value from its shares," the company added.

Search for investor

Saab, which GM sold to Swedish Automobile in February 2010, won protection from creditors in September and has been seeking an investor since then. Guy Lofalk, Saab's court-appointed administrator, applied on Dec. 7, 2011, to end the reorganization, saying that the carmaker was out of money and had no realistic hope of gaining financing soon.

Saab was in discussions with Youngman and a Chinese bank to secure about $782 million (600 million euros) in loans, Swedish Automobile CEO Victor Muller said on Dec. 7, 2011. GM said on Dec. 17 that it couldn't support proposed alternatives for Saab because the options "are not meaningfully different" from previous suggestions that GM had rejected on the grounds that they would hurt the U.S. company.

Saab's workforce totals about 3,600 employees, including 3,400 in Trollhattan, Sweden. Saab's vehicle sales, which reached 133,000 cars in 2006, have plunged in the last few years. The company sold 31,696 cars in 2010, missing a target of 50,000 to 60,000 vehicles.

U.S. sales in 2011 through November rose 42 percent, to 5,340.

Swedish Automobile, which changed its name from Spyker Cars NV in June, had planned for Saab to sell 120,000 cars and become profitable by 2012. The Zeewolde, Netherlands-based company, which began in 1898 as a maker of horse-drawn wagons, has more recently been a manufacturer of supercars, including the $235,000 C8 Aileron. Saab began as Svenska Aeroplan Aktiebolaget in 1937, making airplanes, and started producing cars in 1947.

Saab Auto split from the aerospace operations, now known as Saab AB, in the 1990s, with GM gaining a 50 percent stake in 1990 and full control in 2000.

The U.S. carmaker, itself saved by a U.S.-steered bankruptcy in 2009, put Saab on the block that year as one of four divisions marked for sale or shutdown. Saab Auto suspended production in March 2011, when it couldn't pay suppliers, and has only occasionally restarted assembly lines since then. It has delayed wages several times and has yet to give workers pay that was due at the end of November 2011.

FULL SAAB STATEMENT

Zeewolde, The Netherlands, 19 December 2011--Swedish Automobile N.V. (Swan) announces that Saab Automobile AB (Saab Automobile), Saab Automobile Tools AB and Saab Powertrain AB filed for bankruptcy with the District Court in V

By Automotive News