Beleaguered Swedish carmaker Saab will undergo restructuring as an independent unit to stave off bankruptcy after it was abandoned by its owner General Motors, Saab said today.
'On Friday, the Vaenersborg district court approved the request for a reorganisation and restructuring which Saab's representative submitted earlier in the morning,' GM said in a statement.
'We are now recreating Saab Automobile as an independent unit. The road ahead will not be easy,' Saab managing director Jan Aake Jonsson said.
The move came after GM warned that Saab would have to file for bankruptcy protection 'as early as this month' unless it received help from the Swedish government, which in turn flatly refused to step in and rescue the car maker.
Restructuring allows parts of Saab to survive and could enable suppliers, who would lose all the money owed them by the company if it filed for bankruptcy, to get some money back by agreeing to accept partial repayment.
GM said the move was aimed at creating 'a fully independent business entity that would be sustainable and suitable for investment.'
The reorganisation is a Swedish legal process headed by an independent administrator appointed by the court who will work with Saab management.
The restructuring will be executed over a three-month period and will require independent funding to succeed,' GM said. Funding will be sought from both private and public sources, it added.
Saab's Jonsson remained optimistic that the Swedish brand could survive, pointing out it has three new models ready for launch over the next 18 months.
'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,' he said.
Saab employs about 4,100 people in Sweden. Including suppliers, some 15,000 jobs in Sweden are believed to be at risk if the unit disappears. A crisis for the car supplier industry would also have negative effects on Sweden's other car maker, Volvo, owned by Ford. GM bought 50% of Saab in 1990 and acquired the rest 10 years later.
But the Swedish company has registered chronic losses over the past 20 years. The brand, once renowned for its cutting-edge technology and futuristic designs, has in recent years suffered from an aging product line and plunging sales.
In the fourth quarter last year, Saab's sales nosedived 38% to just 17,900 cars. For all of 2008, the Swedish car maker sold only 93,300 vehicles down from 120,000 just three years earlier.