Saab owes suppliers euro 150 million, CEO says

ERJ staff report (AN)

Amsterdam / Stockholm (Reuters) -- As Saab seeks court protection from creditors to avoid being pushed into bankruptcy, its CEO says the company owes 150 million euros to suppliers.

Production at Saab's Swedish plant has been at an almost continuous standstill since April because suppliers refused to provide parts until they received payment. It also failed to pay European salaries in August.

Speaking at a news conference on Wednesday, Victor Muller said it was the firm's goal to pay its creditors in full.

Saab's Dutch owner Swedish Automobile, whose shares were suspended in Amsterdam, said court protection would give the 60-year-old company breathing space to come to terms with creditors, get official approvals for Chinese investments and secure other short-term financing.

"We have to bridge the financial gap. We felt the most orderly and quiet way to do it, bring some peace to this company, was to seek the protection of the court and to ensure that nothing can happen to Saab in the meantime," Muller, who is also CEO of Swedish Automobile, told the news conference.

The company said in its filing to the court in western Sweden, where Saab is based, that it could not rule out bankruptcy if the creditor protection was not successful.

The court is to announce its decision on whether or not to grant the creditor protection later today.

Grave difficulties

Analysts warned that the company faced grave difficulties.

"Obviously a restructuring is preferable to bankruptcy. But receivership is still a step closer to bankruptcy. We've always warned investors it was extremely risky," said Jan Maarten Slagter, director of the Dutch shareholders' association, VEB.

Saab, previously owned by General Motors Co., was rescued from closure by Spyker Cars NV, now Swedish Automobile, in early 2010.

In June, Saab said two Chinese car companies, Pang Da Automobile Trade Co Ltd and Zhejiang Youngman Lotus Automobile, had agreed to take a combined majority stake in the firm for a total of 245 million euros.

The deals are still awaiting approval from the Chinese authorities -- but the collapse in Swedish Automobile's share price this year has seen the value of Saab's listed parent plummet from 66.7 million euros, when the China rescue was announced, to Tuesday's closing market cap of 14.8 million euros.

Muller told the news conference, which took place at Saab's plant in Trollhattan, that he was sure the Chinese deals would come through, even though Swedish newspaper Dagens Industri reported that the Chinese authorities were unlikely to approve Youngman.

"We are of the opinion, based on expert advice, that approval will be... timely," he said.

Auto enthusiasts and Saab devotees worldwide are still hoping the firm will survive. Muller said the company had lost a lot of clients' trust, but added: "We are not dead yet."

He also denied a report in Dagens Industri that his relationship with another potential investor, Russian Vladimir Antonov, had turned sour.

"That is a joke... that is total nonsense," he said.

But the Chinese authorities have halted planned investments in the past, such as Saab's failed deal with Hawtai Motor Group in May and Sichuan Tengzhong Heavy Industrial machinery's bid for GM's Hummer, which collapsed in 2010.

Dagens Industri said state-owned Beijing Automotive Industry Holdings Co (BAIC) or sport utility vehicle maker Great Wall Motor, were seen by Chinese officials as being more suitable partners. A source told Reuters in May that Great Wall had been talking with Saab's owner about a possible tie-up.

Karl Ask, who heads the Swedish Saab fan club and owns 11 Saab models added: "I hope the Chinese come and help, otherwise I'm not so sure any more about Saab's future.

"Victor Muller is interested in Saab, he loves Saab and that's good. But they need money."

From Automotive News (A Crain publication)