Saab restructuring process in danger

Saab restructuring process in danger
The restructuring of Saab could be called off after the company's administrator Guy Lofalk on Thursday applied for the process to be halted, according to a statement from Swedish Automobile (SWAN), Saab's parent company.

Guy Lofalk, who has been appointed by the Vänersborg district court in southwestern Sweden to oversee Saab’s three-month restructuring process under

bankruptcy protection, had informed the company he would ask that the process be terminated, SWAN said in a statement.

Although the statement did not provide an explanation, Lofalk’s decision indicates he does not think the restructuring will be successful.

The District Court will decide whether to approve Lofalk’s application. If the application is granted, the bankruptcy petitions from Saab’s creditors will be reactivated.

“Saab Automobile shall contest this application and request for continuation of the voluntary reorganisation process,” SWAN said, adding that it also planned to “apply at the court for replacement of Mr. Lofalk as administrator.”

Saab’s Chinese backers have so far only pumped in a portion of the money needed to secure Saab’s immediate future. According to the plan, Saab should have received 640 million kronor ($97 million) by Saturday.

SWAN has previously said it doubts Chinese companies Youngman and Pang Da will pay the required money by Saturday.

Saab must urgently secure funding in order to continue the reconstruction.

The company has therefore turned to American venture capital firm North Street Capital for help.

The deal would give North Street 2.4 million shares worth $4.19 a piece and the money would be with Saab on Friday. It would also include a $60 million loan which is still being negotiated.

“Immediate availability of funding is necessary to continue the reorganisation process of Saab Automobile,” the company said.

According to SWAN, the goal is to have completed the documentation by Monday at the latest.

If the planned transactions go through, Saab will receive 66 million kronor from their share issue, and a total of 396 million by next Wednesday.

Saab’s wage bill is currently being covered by the Swedish state salary guarantee scheme but this is due to expire on Friday after which Saab will be liable for paying employee wages.

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