June 22, 2018
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Saab seeks protection from creditors as it tries to restart

Saab is seeking a court-administered voluntary restructuring for the second time in as many years.
By Ola Kinnander, Bloomberg News

TROLLHAETTAN, Sweden — Saab Automobile, the 64-year-old Swedish carmaker that halted production in June, applied for court protection from creditors Wednesday in a bid to raise money to restart operations and avoid a bankruptcy petition by unions.

“The reorganization is a move to stabilize the company in this tremendously rocky period,” Chief Executive Officer Victor Muller said in an interview at the company’s headquarters in Trollhaettan.

The carmaker is seeking a court administered voluntary restructuring for the second time in as many years after previous owner General Motors began liquidating Saab Auto at the beginning of 2009. GM eventually sold Saab to Spyker Cars in February last year for about $400 million in cash and shares.

Saab Auto traces its roots to aircraft company Svenska Aeroplan, founded in 1937 to secure production of Swedish warplanes, and is based in Trollhaettan, a cradle of the country’s 19th-century industrialization. GM bought one half of Saab in 1990 and took full ownership a decade later.

“Everyone here is rooting for Saab to succeed but this time it seems to be over,” said Martin Johansson, a 21-year-old cashier at a Trollhaettan gas station who has family friends working at the carmaker. “It would be wonderful if they make it but I don’t think they will.”

Saab ran into a cash crunch as sales suffered last year after it took longer than expected to restore production and roll out the new 9-5 sedan after GM had emptied the factory of equipment in January 2010 amid the planned shutdown.

The carmaker, which aimed to become profitable in 2012 and sell 120,000 autos, first suspended production in March as funding dried up. After brief restarts, the Trollhaettan plant has been silent since early June. Saab delayed paying wages last month, the third consecutive postponement, prompting labor leaders to start a process that could have led to a bankruptcy declaration. They said today they’ll hold off.

The filing, made at the Vaenersborg District Court, will lead to a voluntary reorganization that will last from three months to a year, Saab said Wednesday. The manufacturer plans to present a restructuring plan to its creditors within three weeks, it said. The court will rule on whether to accept the reorganization filing tomorrow, it said on its website.

Swedish Automobile, Spyker’s new name, has dropped 79 percent this year, valuing the Zeewolde, Netherlands-based company at $23.5 million. Trading in the shares was suspended in Amsterdam at the request of the regulator, NYSE Euronext said.

“A reorganization makes sense because it buys Saab some time,” said Tom Muller, an analyst at Theodoor Gilissen in Amsterdam. “But they absolutely still have to come up with a lot of new funds very quickly.”

Saab entered the U.S. market in 1957 with the 93 model and became internationally known for aerodynamic design that gave a nod to its aviation history. The brand gained a reputation for being offbeat, practical and safe. Features and innovations that defined Saab for decades included headlight wipers, self- repairing bumpers and side-impact door beams.

Saab during the last two decades lost much of the quirkiness that had defined the carmaker as GM pushed it to share parts, engines and chassis with Opel and other brands in the group. In 2009, crisis-hit GM put Saab on the block as one of four brands marked for sale or liquidation.

Saab sales peaked at 133,000 vehicles in 2006 and have been on a downward trajectory since then. Last year it sold 31,696 cars, below an original target of between 50,000 and 60,000.

“We still have some hopes, but when they can’t pay salaries you know it’s near the end,” said Maria Salo, who runs a cleaning firm in Trollhaettan and whose husband works at Saab as an equipment maintenance guy. “I’m just glad we both don’t work there.”

 With assistance from Tian Ying in Beijing and Johan Carlstrom in Stockholm.

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