Saab seeking bankruptcy protection

AMSTERDAM - Reuters

The logo of Swedish car manufacturer Saab is seen in front of a Saab dealer in Zurich. Ailing Swedish carmaker Saab is seeking court protection from its creditors so it can reorganize most of its domestic operations and seek funds as it awaits investment from China. REUTERS photo

Ailing Swedish carmaker Saab sought breathing space from creditors on Wednesday, filing with a local court for bankruptcy protection through a “voluntary reorganization” while it continues to wait for promised new investments from two Chinese companies.

“Obviously a restructuring is preferable to bankruptcy. But receivership is still a step closer to bankruptcy. We’ve always warned investors it was extremely risky,” said Jann Maarten Slagter, director of the Dutch shareholders’ association, VEB.

Struggling carmaker

Saab, rescued from closure by General Motors in early 2010 by Amsterdam-listed Spyker Cars - later renamed Swedish Automobile (Swan) - has struggled for several months while it pursues funding from investors. Production at its Swedish plant has been at an almost continuous standstill since April as suppliers refused to provide parts until they received payment. The company also failed to pay salaries in August.

In June, Saab said two Chinese car companies, Pangda Automobile and Zhejiang Youngman Lotus Automobil, had agreed to take a combined majority stake in the firm. The deals are still awaiting approval from the Chinese authorities.

“The eventual purpose of the proposed voluntary reorganization process is to secure short-term stability while sumultaneously attracting additional funding, pending the inflow of the equity contrbutions of Pang Da and Youngman,” Swan said in a statement on Wednesday.

But the Chinese authorities have halted planned investments in the past, such as Saab’s failed deal with Hawtai Motor Group in May and Sichuan Tengzhong Heavy Industrial machinery’s bid for GM’s Hummer, which collapsed in 2010.

Swedish newspaper Dagens Industri said late on Tuesday that Youngman would not get the necessary Chinese official approval to take part in the deal, citing several sources. Instead, state-owned Beijing Automotive Industry Holdings, or BAIC, or Great Wall Motor, were seen by Chinese officials as being more suitable partners, the newspaper said