Sweden's Saab in contact with 20 potential buyers

[April 06, 2009]  STOCKHOLM (AP) -- Saab Automobile, the troubled Swedish unit of General Motors Corp., is in contact with around 20 potential buyers, with a sale planned to be completed in June, the car maker's lawyer said Monday.

Lawyer Guy Lofalk, who is in charge of restructuring Saab, said a sale of the company is a "crucial prerequisite for a successful reconstruction."

"So far, a short presentation of Saab has been sent out and extensive contacts have occurred with interested parties," he said in a court document presented on Monday to creditors in the Vanersborg District Court.

Saab went into bankruptcy protection on Feb. 20 in an effort by GM to spin off or sell the unit. The danger of a collapse still hovers over the ailing brand because neither GM nor the Swedish government appears ready to provide enough money to keep it going as a freestanding entity.

Monday's court hearing gave creditors an opportunity to challenge the reconstruction process. However, all creditors agreed to a continuation of the process, and the court ruled the bankruptcy protection can continue until May 20.

Saab said it intends to apply for an extension of the protection period.

As part of his presentation, Lofalk said Saab plans to start negotiations with creditors in June to write down all non-prioritized debt by around 75 percent. Saab then expects to pay the remaining 25 percent of that debt within a year.

By improving efficiency and concentrating production to the site in Trollhattan in western Sweden, the company aims to reach break-even at a production of just below 130,000 cars, he said. The planned launch of three new models in 2009 and 2010 is expected to help increase production.

"Saab counts on a positive cash flow already 2011 as well as a good return with a production of 150,000 cars," Lofalk said.

In 2008, Saab produced 93,000 cars.

Lofalk said Saab needs financing of around $1 billion, of which $600 million is expected to come from the European Investment Bank. The remaining $400 million is expected to be paid by GM, partly through writing down debt and partly by supplying tools for the manufacturing of Saab's new car models.

[Associated Press; By MALIN RISING]

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