Saab, the under-performing Swedish arm of General Motors, is to effectively divest itself of its US parent by seeking protection under Swedish financial laws to operate as a separate entity.
In a statement issued from Saab HQ in Trollhättan, the company says that as a result of GM’s strategic review of the global Saab business the Saab Board has announced today that it will file for reorganisation under a self-managed Swedish court process to create a fully independent business entity that would be sustainable and suitable for investment.
What that means is that the reorganisation is a self-managed, Swedish legal process headed by an independent administrator appointed by the court who will work closely with the Saab management team.
GM, which itself faces mountainous debts and a future that hangs in the balance, refuses to continue funding Saab’s losses alone.
In a survival plan submitted to the US Treasury this week, GM said the Swedish firm would become an independent business as of January 1 next year, after 20 years of GM control.
As part of the process, Saab will formulate its proposal for reorganisation, which will include the concentration of design, engineering and manufacturing in Sweden.
This proposal will be presented to creditors within three weeks of the filing and pending court approval, the reorganisation will be executed over a three-month period and will require independent funding to succeed.
Saab lost about three billion crowns (US$340 million) in 2008, according to documents filed with the Swedish court that granted the company a stay of execution.
The company expects a similar loss this year, blaming slack demand, aging products, overcapacity and high costs.
“We explored and will continue to explore all available options for funding and/or selling Saab and it was determined a formal reorganization would be the best way to create a truly independent entity that is ready for investment,” said Jan Ake Jonsson, managing director for Saab Automobile.
“With an all new 9-5, 9-3X and 9-4X all ready for launch over the next year and a half, Saab has an excellent foundation for strong growth, assuming we can get the funding to complete engineering, tooling and manage launch costs.
“Reorganisation will give us the time and means that help get these products to market while minimising the liquidity impact of Saab on GM.”
Funding for the restructured company will need to be secured during the reorganisation process and will be sought from both public and private sources.
Swedish daily Dagens Industri said today that GM is prepared to pump in US$400 million into Saab if the Swedish state guarantees a further loan of US$590 million.
The Swedish government is said to have indicated it will pump more funds into Saab to keep the company alive if it can see a future for the company’s products.
General Motors says that Saab will continue to operate as usual and in accordance with the formal reorganisation process, with the Swedish government providing some support during this period.
The company said that the reorganisation should have no impact on other GM operations.