Saab heads for scrapyard as long rescue quest fails

TROLLHATTAN, Sweden -- Famed Swedish car maker Saab was declared bankrupt by a court on Monday, ending a nine-month survival battle by its Dutch owner.

Saab, which has made cars for 64 years, has suffered cash flow problems since March after 2010 sales fell short of target amid the disruption of its sale by General Motors.

It has not made any vehicles since April and several rescue attempts have failed.

Saab owner Swedish Automobile said former owner and key license holder GM had blocked a last-ditch rescue plan by Chinese investor Zhejiang Youngman Lotus Automobile.

"That, basically, was the last nail in the coffin of this beautiful company," Swedish Automobile Chief Executive Victor Muller told reporters hours after handing in a request to a Swedish court to declare Saab bankrupt.

The court approved the company's bankruptcy request and appointed two receivers to run the company.

"After having received the recent position of GM on the contemplated transaction with Saab Automobile, Youngman informed Saab Automobile that the funding to continue and complete the reorganization of Saab Automobile could not be concluded," Saab's Dutch owner, Swedish Automobile, said in a statement after the petition was filed.

"The Board of Saab Automobile subsequently decided that the company without further funding will be insolvent and that filing bankruptcy is in the best interests of its creditors."

 Swedish Automobile "does not expect to realize any value from its shares," the company added.

In receivers' hands

Saab is still attractive for some investors, Swedish Automobile said.

"There are parties out there that have expressed an interest to pursue a possible acquisition of Saab from bankruptcy," Muller told a news conference. He said it was now up to the receivers appointed to oversee the bankruptcy process to judge such offers.

He said GM had been a problem in finalizing a rescue plan, though its unhelpful attitude had only emerged from the middle of the year. He said a court-appointed lawyer who had overseen Saab's creditor protection process had undermined rescue efforts.

Michele Tinson, a spokeswoman for the automaker's U.S. sales operations, said today it is "too premature to define our next steps at this time."

Saab currently has 188 U.S. dealers.

Total U.S. sales this year through November rose 22 percent from a year earlier to 5,340. Saab's U.S. sales peaked at 48,181 units in 1986.

"It feels really tough," Mats Faegerhag, Saab's product development chief, said in a phone interview. "We've been fighting so hard for so long. Saab is part of Sweden's industrial history, and it'd be a big blow not just to us if we go under."

There is still a possibility for Saab to be rescued in one piece if a "viable investor" steps in, Faegerhag said. "But that would have to happen quick, in a few weeks, because our employees will be looking for other jobs."

Saab, which GM sold to Swedish Automobile in February 2010, won protection from creditors in September and has been seeking an investor since then.

Guy Lofalk, Saab's court-appointed administrator, applied on Dec. 7 to end the reorganization, saying the carmaker was out of money and had no realistic hope of gaining financing soon.

Saab was in discussions with Youngman and a Chinese bank to secure about 600 million euros ($782 million) in loans, Swedish Automobile's Muller said on Dec. 7.

GM said on Dec. 17 that it couldn't support proposed alternatives for Saab because the options "are not meaningfully different" from previous suggestions GM had rejected on the grounds they would hurt the U.S. company.

Saab's workforce totals about 3,600 employees, including 3,400 in Saab's hometown of Trollhaettan, Sweden.

Saab's global vehicle sales, which reached 133,000 cars in 2006, have plunged in the last few years. The company sold 31,696 cars in 2010, missing a target of 50,000 to 60,000 vehicles.

Swedish Automobile, which changed its name from Spyker Cars NV in June, had planned for Saab to sell 120,000 cars and become profitable by 2012.

The Zeewolde, Netherlands-based company, which began in 1898 as a maker of horse-drawn wagons, has more recently been a manufacturer of supercars, including the $235,000 C8 Aileron. Saab began as Svenska Aeroplan Aktiebolaget in 1937, making airplanes, and started producing cars in 1947.

Aerospace split

Saab Auto split from the aerospace operations, now known as Saab AB, in the 1990s, with GM gaining a 50 percent stake in 1990 and full control in 2000.

The U.S. carmaker, itself saved by a U.S.-steered bankruptcy in 2009, put Saab on the block that year as one of four divisions marked for sale or shutdown.

Saab Auto suspended production in March, when it couldn't pay suppliers, and has only occasionally restarted assembly lines since then. It has delayed wages several times and has yet to give workers pay that was due at the end of November.

Youngman, Chinese car dealer Pang Da Automobile Trade Co. and Russian banker Vladimir Antonov, a former Spyker shareholder, have all been failed suitors for a stake in Saab as Muller tried to fund the unit's turnaround since its purchase.

Saab's collapse may also hurt competitor Volvo Car Corp., the Swedish automaker owned by China's Zhejiang Geely Holding Group Co., as suppliers to both manufacturers will be hampered and may go out of business as well, production chief Faegerhag said.

Editor's note: An earlier version of this story overstated Saab's percentage gain in U.S. sales this year.

Reuters and Bloomberg contributed to this report.

Zeewolde, The Netherlands, 19 December 2011 – Swedish Automobile N.V. (Swan) announces that Saab Automobile AB (Saab Automobile), Saab Automobile Tools AB and Saab Powertrain AB filed for bankruptcy with the District Court in Vänersborg, Sweden this morning.

After having received the recent position of GM on the contemplated transaction with Saab Automobile, Youngman informed Saab Automobile that the funding to continue and complete the reorganization of Saab Automobile could not be concluded. The Board of Saab Automobile subsequently decided that the company without further funding will be insolvent and that filing bankruptcy is in the best interests of its creditors. It is expected that the Court will approve of the filing and appoint receivers for Saab Automobile very shortly.

Swan does not expect to realize any value from its shares in Saab Automobile and will write off its interest in Saab Automobile completely.