Crisis-hit Saab files for bankruptcy protection
TT/AFP/The Local · 7 Sep 2011, 12:22
Published: 07 Sep 2011 08:49 GMT+02:00
Updated: 07 Sep 2011 12:22 GMT+02:00
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The move comes after a period of intense speculation and reports that Saab's cash has run dry with workers left without salaries for August and debts to suppliers left unpaid.
The application for what is officially referred to as a business reconstruction provides Saab protection form its creditors and also means that employee salaries will be paid out by the state salary guarantee.
According to the press release, an application was submitted to Vänersborg District Court on Wednesday morning.
Saab's subsidiaries Saab Automobile Powertrain and Saab Automobile Tools are also covered by the reconstruction.
The purpose is to secure "short term stability" and at the same time open up for further financing in anticipation of expected funds from Chinese firms Pang Da and Youngman, the company explains.
Saab's CEO and chairman Victor Muller has searched worldwide over the past six months trying to secure financing to enable the firm to restart its Trollhättan factories, which have lain dormant since the spring.
The last time Saab entered reconstruction was in 2009 prior to takeover discussions with Swedish sports car maker Koenigsegg.
Saab have summoned factory staff to work on Wednesday, according to a report on the TV4 Nyheterna news programme.
"They will be given information, an update on the situation," said Gunilla Gustavs at Saab's information department to the TT news agency.
The main union at Saab, IF Metall, said Wednesday it thought filing for reorganisation "could be a positive solution for Saab," adding that it hoped
the court would process the request soon so its "members can quickly receive
word about their salary payments."
Swedish Automobile's share price on Wednesday remained unchanged shortly
after opening on the Amsterdam Stock Exchange at 0.72 euros per share.
Rumours of a looming bankruptcy have long been circulating, as production has remained halted for months and the company has scrambled to dig up cash to pay off piles of unpaid bills to suppliers.
On Wednesday, Saab said it would "seek the support of its creditors for the reorganisation process and is confident it will obtain this support, particularly because Saab Automobile aims at full redemption of outstanding debts."
It said the aim of the reorganisation was "to secure short-term stability while simultaneously attracting additional funding" as it waits for a pending cash injection from its already agreed partnerships with Chinese firms Pang Da and Youngman, to get production moving.
"While the voluntary reorganisation process will no doubt present us with a number of tough issues and decisions, I believe that Saab Automobile will emerge stronger from this process," Muller said in the statement.
Saab's problems have become increasingly apparent in recent months as Muller has scrambled to pull together funds to pay bills and restart production, and became glaringly obvious late last month when Saab for the third month in a row said it would not be able to pay all of its 3,700 employees their salaries on time.
August salaries have yet to be paid, and Saab said that as part of its reorganisation application it had requested "the Swedish state's wage guarantee scheme to allow wage payments to all Saab Automobile employees to be made."
Wednesday's announcement came just two and a half years after the carmaker last went through a large-scale restructuring to avoid bankruptcy, when more than 75 percent of its debts were written down.
But observers were quick to point out that the situation today is radically different than last time.
While the brand in February 2009 had a number of new models brewing, never halted production and enjoyed some protection from its owner GM, it is now in the precarious situation of having basically halted production since April with a current owner unable to even provide enough cash to pay salaries.
Bankruptcy expert and lawyer Rolf Aabjoernsson, who represented Saab creditors during the last reorganisation, said on Wednesday he expected the court to reject Saab's request.
"How could Saab succeed when they have no money, no production, nothing?" he asked in comments to the TT news agency.
"They have nothing besides dreams and they don't stand up in court," he added.
It is not yet known when the court will announce its decision.