saab files for bankruptcy protection
Last Updated : GMT 04:22:55
Arab Today, arab today
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Saab files for bankruptcy protection

Arab Today, arab today

Arab Today, arab today Saab files for bankruptcy protection

London - Arabstoday

Struggling Swedish carmaker Saab is filing for bankruptcy protection. Its owner Swedish Automobile said the move was \"to secure short-term stability while simultaneously attracting additional funding\". Saab had to stop production in April when its suppliers stopped deliveries after not being paid. Its workers have also had their pay delayed for three months in a row. Swedish Automobile is continuing its efforts to sell minority stakes. \'Wounded animal\' It said it now intended to present a reorganisation plan to creditors within three weeks of filing it in a Swedish court. The firm added that it was confident it would get their support. However, car analyst Jay Nagley, of Red Spy Automotive, told the BBC that the future still looked bleak for Saab. Continue reading the main story Analysis image of Jorn Madslien Jorn Madslien Business reporter, BBC News Having applied for protection from its creditors, Saab will now have to rebuild its finances. Without fresh injections of funds, the company will remain unable to pay its workers and suppliers, hence it will struggle to secure their services in future. The uncertainty about the carmaker\'s future has also spooked its customers, so Saab dealers have been finding it increasingly difficult to sell the cars. With demand for the cars dwindling, and with fears about Saab\'s ability to continue producing them, most investors will probably shy away from the company. Hence, anyone still interested will be able to enter the negotiations from a position of power.     \"I\'m just amazed that Saab is still alive at this stage,\" he said. \"It is like a wounded animal. You think it is dead, but then it goes and twitches again.\" Mr Nagley added: \"The key issue is which motorist in their right mind in Europe or the US would choose to buy a Saab? \"Why would you risk buying an expensive new car if the manufacturer might not be around in three years time?\" Delayed deals Swedish Automobile, formerly called Spyker, bought Saab from US giant General Motors in January 2010. Before the summer, Swedish Automobile announced that two Chinese firms would buy minority stakes in the company. The brand is tarnished, and the company doesn\'t own any of its own technology - all the cars are based on GM Opels” End Quote Jay Nagley Red Spy Automotive They also need to be approved by the European Investment Bank (EIB). Under the agreements, Zhejian Youngman Lotus Automobile plans to pay 136m euros ($191m; £120m) for a 29.9% stake, while Pang Da Automobile will pay 109m euros for 24%. Mr Nagley added that he did not expect the Chinese government to give the two companies the go ahead. \"The Chinese government is concerned that its car industry is too fragmented,\" he said. \"It wants to see fewer, larger firms that can compete on the international stage. It doesn\'t want to see ambitious companies like these two buying a very small Swedish manufacturer.\" Jonas Froberg, car correspondent at Swedish newspaper Svenska Dagbladet, agreed that there was no guarantee the Chinese authorities would back the deals. \"The deals not getting approval in China is the biggest nightmare for Victor Muller [the boss of Swedish Automobile],\" he said. \"People in Sweden love Saab, and they hope it will continue. But many are pessimistic, and have become more so over the summer.\" Loss making The EIB agreed to provide Spyker with loans totalling 400m euros when it bought Saab. Saab\'s factory in Trollhattan, Sweden Production has been halted at Saab\'s factory in Trollhattan since April However, the EIB funds are only being released in tranches, and the money has currently stopped because Saab is not meeting its performance criteria. Saab sold just 30,000 vehicles in 2010, with analysts saying it needs to sell 120,000 just to break even. The carmaker, which emloys about 3,700 people, was able to sustain these losses under GM\'s ownership, but its then US owner also starved Saab of the required investment to extend its product range. Mr Nagley added that it was difficult to ultimately see anyone buying the Saab company, or even just the brand name. \"The brand is tarnished, and the company doesn\'t own any of its own technology - all the cars are based on GM Opels,\" he said. \"It is estimated that it would cost more than 1bn euros to put Saab on a sound footing, and I can\'t see even a Chinese company being prepared to pay that.\"  

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