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Bankruptcy is not an option? Sweden begs to differ.
Our government should follow the sensible course of action taken by the Swedish government and just say no to the endless enormous handouts requested by political cronies. The Canadians should treat GM and Europe should treat Opel likewise.
Our government should follow the sensible course of action taken by the Swedish government and just say no to the endless enormous handouts requested by political cronies. The Canadians should treat GM and Europe should treat Opel likewise.
Saab Seeks Protection From Creditors as GM Pulls Out (Update4)
By Niklas Magnusson and Chad Thomas
Feb. 20 (Bloomberg) -- Saab Automobile sought protection from creditors after parent General Motors Corp. said it will cut ties with the Swedish carmaker following two decades of losses.
Saab, based in Trollhaettan, will split from GM and bring resources back to Sweden, Saab Chief Executive Officer Jan Aake Jonsson said at a press conference today. The reorganization, slated to take three months, will place Saab under court supervision with the aim of creating an independent business. GM first invested in the Swedish automaker in 1990.
Saab’s future was put in doubt after GM said on Feb. 18 that it wants to cut the unit loose by 2010, with financial aid from the Swedish government. Sweden has ruled out taking over Saab, saying taxpayers shouldn’t help the unprofitable company. Saab lost about 3 billion kronor ($341 million) last year and will have a similar deficit this year, it said in court documents.
“Unless the Swedish government is prepared to put a lot of money into Saab, I think that this is just another step down the road to the graveyard,” said Stephen Pope, chief global strategist at Cantor Fitzgerald in London.
The District Court of Vaenersborg will appoint a supervisor for the reorganization, and a meeting with creditors will take place within a few weeks. Saab proposed Guy Lofalk of Stockholm- based law firm Lofalk Advokatbyrå AB as supervisor. Lofalk, whose firm specializes in reorganizations, wasn’t available to comment.
‘Release Me’
Under Swedish reorganization, which is similar to U.S. Chapter 11, the supervisor works with existing management to write off most of a company’s debt. The court evaluates the progress after three months and decides whether to extend the program to a maximum one year or liquidate the business.
Creditors include suppliers BASF AG, Continental AG, Autoliv Inc., as well as SEB AB, Sweden’s second-largest bank. GM will create “a viable mechanism for the timely payment of suppliers’ claims toward Saab,” it said in an e-mailed statement.
“There are good chances that the financing problems will be solved,” Saab CEO Jonsson said at the press conference, which opened to the song “Release Me” by Swedish band Oh Laura, which features in the carmaker’s advertising campaigns.
Saab’s European market share in 2008 was 0.4 percent, according to the European Automobile Manufacturers Association. That compares with 1.5 percent for Swedish rival Volvo. The BMW brand last year had a European market share of 4.6 percent, Mercedes-Benz was 4.7 percent and Audi was 4.5 percent.
Turbo Engines
Saab, which employs about 4,100 people in Sweden, sold fewer than 100,000 cars last year and relies on two models. The company racked up an operating loss of 16.5 billion kronor in the five years until 2008, and Saab attributed the deficit to an ageing and overly narrow product portfolio. Saab aims to return to profit by 2011, it said in the filing.
Saab’s popularity peaked in the 1980s, when the 900 model drew buyers seeking a European car that stood for technical innovation, safety, luxury and idiosyncratic design. Saab was the first carmaker to introduce side-impact protection systems in 1972, and it spearheaded the use of turbo-charged engines. The car was the vehicle of choice for comedian Jerry Seinfeld.
The company said it needs funding to complete engineering, tooling and manage launch costs on three new vehicles. Saab said it will seek funds both from the state and private investors. The Swedish government “can try to help but we won’t take on ultimate responsibility,” spokesman Haakan Lind said.
‘Will be Difficult’
“In the current environment, and in light of its cost disadvantages, it will be difficult to find a buyer, and I don’t see a viable future as a stand alone,” said Michael Tyndall, an auto analyst at Nomura Securities in London.
Saab has struggled since GM bought half of the automaker in 1990 from Investor AB, the Wallenberg family’s publicly traded holding company. The company only reported an annual profit once in the last 20 years. In Sweden, it ranks behind Volvo Cars, Volkswagen AG and Toyota Motors Co. in popularity. GM took full control of Saab in 2000.
GM has set March 31 for deciding on all its European divisions’ future as the Detroit-based carmaker seeks as much as $16.6 billion in new U.S. federal loans, which hinge on stemming losses and debt. General Motors aims to cut $1.2 billion from labor costs in Europe and options include closing plants.
The U.S. company said in a report to the U.S. Treasury on Feb. 17 that it will end financial support for Saab by Jan. 1. GM said later that its Ruesselsheim, Germany-based Opel division and Luton, England-based Vauxhall unit are integral to operations.
Saab traces its origins to aircraft company Svenska Aeroplan AB, founded in 1937 to secure production of Swedish warplanes. The first car left the factory a decade later. The automaking operation is now separate from Linkoeping, Sweden-based Saab AB, the maker of the Gripen fighter plane.
“Saab doesn’t have the scale and it doesn’t know who it wants to be,” Pope said. “It’s going to take several years to figure that out, and unfortunately in this economic environment, you don’t have that luxury.”
To contact the reporter on this story: Niklas Magnusson in Stockholm at nmagnusson1@bloomberg.net
Last Updated: February 20, 2009 09:21 EST
By Niklas Magnusson and Chad Thomas
Feb. 20 (Bloomberg) -- Saab Automobile sought protection from creditors after parent General Motors Corp. said it will cut ties with the Swedish carmaker following two decades of losses.
Saab, based in Trollhaettan, will split from GM and bring resources back to Sweden, Saab Chief Executive Officer Jan Aake Jonsson said at a press conference today. The reorganization, slated to take three months, will place Saab under court supervision with the aim of creating an independent business. GM first invested in the Swedish automaker in 1990.
Saab’s future was put in doubt after GM said on Feb. 18 that it wants to cut the unit loose by 2010, with financial aid from the Swedish government. Sweden has ruled out taking over Saab, saying taxpayers shouldn’t help the unprofitable company. Saab lost about 3 billion kronor ($341 million) last year and will have a similar deficit this year, it said in court documents.
“Unless the Swedish government is prepared to put a lot of money into Saab, I think that this is just another step down the road to the graveyard,” said Stephen Pope, chief global strategist at Cantor Fitzgerald in London.
The District Court of Vaenersborg will appoint a supervisor for the reorganization, and a meeting with creditors will take place within a few weeks. Saab proposed Guy Lofalk of Stockholm- based law firm Lofalk Advokatbyrå AB as supervisor. Lofalk, whose firm specializes in reorganizations, wasn’t available to comment.
‘Release Me’
Under Swedish reorganization, which is similar to U.S. Chapter 11, the supervisor works with existing management to write off most of a company’s debt. The court evaluates the progress after three months and decides whether to extend the program to a maximum one year or liquidate the business.
Creditors include suppliers BASF AG, Continental AG, Autoliv Inc., as well as SEB AB, Sweden’s second-largest bank. GM will create “a viable mechanism for the timely payment of suppliers’ claims toward Saab,” it said in an e-mailed statement.
“There are good chances that the financing problems will be solved,” Saab CEO Jonsson said at the press conference, which opened to the song “Release Me” by Swedish band Oh Laura, which features in the carmaker’s advertising campaigns.
Saab’s European market share in 2008 was 0.4 percent, according to the European Automobile Manufacturers Association. That compares with 1.5 percent for Swedish rival Volvo. The BMW brand last year had a European market share of 4.6 percent, Mercedes-Benz was 4.7 percent and Audi was 4.5 percent.
Turbo Engines
Saab, which employs about 4,100 people in Sweden, sold fewer than 100,000 cars last year and relies on two models. The company racked up an operating loss of 16.5 billion kronor in the five years until 2008, and Saab attributed the deficit to an ageing and overly narrow product portfolio. Saab aims to return to profit by 2011, it said in the filing.
Saab’s popularity peaked in the 1980s, when the 900 model drew buyers seeking a European car that stood for technical innovation, safety, luxury and idiosyncratic design. Saab was the first carmaker to introduce side-impact protection systems in 1972, and it spearheaded the use of turbo-charged engines. The car was the vehicle of choice for comedian Jerry Seinfeld.
The company said it needs funding to complete engineering, tooling and manage launch costs on three new vehicles. Saab said it will seek funds both from the state and private investors. The Swedish government “can try to help but we won’t take on ultimate responsibility,” spokesman Haakan Lind said.
‘Will be Difficult’
“In the current environment, and in light of its cost disadvantages, it will be difficult to find a buyer, and I don’t see a viable future as a stand alone,” said Michael Tyndall, an auto analyst at Nomura Securities in London.
Saab has struggled since GM bought half of the automaker in 1990 from Investor AB, the Wallenberg family’s publicly traded holding company. The company only reported an annual profit once in the last 20 years. In Sweden, it ranks behind Volvo Cars, Volkswagen AG and Toyota Motors Co. in popularity. GM took full control of Saab in 2000.
GM has set March 31 for deciding on all its European divisions’ future as the Detroit-based carmaker seeks as much as $16.6 billion in new U.S. federal loans, which hinge on stemming losses and debt. General Motors aims to cut $1.2 billion from labor costs in Europe and options include closing plants.
The U.S. company said in a report to the U.S. Treasury on Feb. 17 that it will end financial support for Saab by Jan. 1. GM said later that its Ruesselsheim, Germany-based Opel division and Luton, England-based Vauxhall unit are integral to operations.
Saab traces its origins to aircraft company Svenska Aeroplan AB, founded in 1937 to secure production of Swedish warplanes. The first car left the factory a decade later. The automaking operation is now separate from Linkoeping, Sweden-based Saab AB, the maker of the Gripen fighter plane.
“Saab doesn’t have the scale and it doesn’t know who it wants to be,” Pope said. “It’s going to take several years to figure that out, and unfortunately in this economic environment, you don’t have that luxury.”
To contact the reporter on this story: Niklas Magnusson in Stockholm at nmagnusson1@bloomberg.net
Last Updated: February 20, 2009 09:21 EST
Good one... the government follow through on its promises and hold someone responsible ... 
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