GM plan leaves Saab’s future in doubt

GM plan leaves Saab’s future in doubt
Swedish automaker Saab may find itself filing for bankruptcy protection “as early as this month” if its US parent General Motors (GM) doesn’t get financial assistance from the Swedish government.

The announcement came as part of a massive restructuring plan GM submitted to the US Treasury on Tuesday as part of the terms of a $13.4 billion loan. With auto sales tanking, GM said it could need up to $16.6 billion more by 2011 and said it plans to cut 47,000 jobs worldwide.

GM announced last year plans to try to find a buyer for the troubled Swedish brand.

“Given the urgency of stemming sizeable outflows associated with Saab operations, GM is requesting Swedish government support prior to any sale,” GM said in the 117-page plan.

“The company has developed a specific proposal that would have the effect of capping GM’s financial support, with Saab’s operations effectively becoming an independent business entity effective January 1, 2010.

“While GM is hopeful that an agreement can be reached with the Swedish government to support this direction, the Saab Automobile AB subsidiary could file for reorganization as early as this month.”

Shortly GM announced its plans, Sweden’s Minister for Enterprise and Energy, Maud Olofsson, hinted that Saab wanted to tap the European Investment Bank (EIB) for emergency funding in preparation for a sale by GM.

Olofsson told Sveriges Television that “it is clear that GM wants to sell Saab,” adding that the government will act as a guarantor for any EIB loan to Saab.

US auto giant GM announced back in December that it planned to sell Saab, but the loss-making Swedish brand needs extra funding to secure its survival.

Discussions on securing a loan initially took place between Saab, GM and the Swedish government at the start of December. Swedish press reports say Saab is seeking to borrow as much as €475 million ($600 million).

Volvo Cars, owned by US automaker Ford, already requested a loan of €475 million from the EIB at the end of January.

Around three-quarters of a rescue plan for the Swedish car industry amounting to 28 billion kronor ($3.2 billion) consists of Swedish government guarantees for loans from the EIB.