Saab Says to Fight on for Bankruptcy Protection

Retail Reuters

Swedish carmaker Saab, struggling to fend off a final collapse after a months-long cash shortage, is to appeal against a court decision which has opened the way for its labour unions and suppliers to seek its bankruptcy, it said on Friday.

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A western Swedish district court on Thursday denied the carmaker its request for protection from creditors while it secures Chinese invesment and bridge funding. But it gave Saab, owned by Dutch group Swedish Automobile (Swan) , until Sept. 29 to appeal against the decision.

"We anticipate filing (an appeal) by Monday," Swedish Automobile's chief executive Victor Muller said.

"We are now talking with our Chinese partners and our Chinese advisors to put together a more convincing and compelling information package to submit to the court," he said in an interview on public radio.

Swedish Automobile's shares were down 34 percent at 0.4750 euro at 0840 GMT, after a two-day suspension.

Saab's production line has been halted for months as bills to suppliers remain unpaid. Meanwhile workers are still waiting to get their pay for August and unions have the right to seek bankruptcy if they want to activate a state scheme to pay the salaries instead.

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In Sweden scepticism is now high about the chances of survival for Saab, a small niche maker of premium cars in a highly competitive market.

"End the misery now," was the headline on Friday in daily newspaper Dagens Nyheter, which went on to say that bankruptcy was unavoidable.

"Someone not blinded by all the beautiful phrases about a premium brand with iconic status and a world-class car factory cannot avoid seeing that Saab as a business stands naked," said business daily Dagens Industri.

But Muller said the appeal would answer the first court's questions about the process by which Chinese car companies Pangda Automobile Trade Co Ltd and Zhejiang Youngman Lotus Automobile are seeking approval from China's authorities to invest 245 million euros ($343 million) in Saab.

Saab will also supply to the appeal court more detail on when that money can be expected and whether it is sufficient to get the company up and running again.

 

UNIONS MEET

The first court had said it was not sufficiently clear if or when the Chinese money would be forthcoming.

In a statement, Saab also said it was still talking to several parties about additional short-term funding.

But unions representing Saab's workers were meeting on Friday to discuss a bankruptcy application.

"Clearly, if the unions would push forward ... Saab would be in a very precarious position indeed," Muller said.

Paul Akerlund, mayor of the town of Trollhattan, where Saab is based, said the unions were likely to be patient.

"My understanding is that if there is the least sign of hope then they (unions and workers) are prepared to wait," he told reporters outside the gates of the factory.

"I don't think there will be one (a bankruptcy application) today anyway."

Suppliers, owed 150 million euros by Saab, have already called in bailiffs, who have begun seizing the company's cash.

Muller said that Saab had the money to pay salaries, but was legally unable to do so.

"We would favour one group of creditors and not another - the suppliers. That's why under (a creditor protection) reorganisation we would be in a much more favourable position," he said.

Muller said the only alternative way to stave off a bankruptcy application would probably be "to find someone who would be willing to pay the salaries to the employees from outside Saab." ($1=0.714 euros) (With additional reporting by Simon Johnson, Johan Ahlander and Roberta Cowan; Editing by Greg Mahlich)