|[Sweden] GM unit Saab files for protection from creditors|
Friday February 20, 6:09 am ET
By Karl Ritter, Associated Press Writer
STOCKHOLM (AP) -- General Motors Corp.'s Swedish-based subsidiary Saab filed for bankruptcy protection Friday so it can be spun off or sold by its struggling U.S. parent, officials said.
The move comes after Sweden turned down GM's request for government help for Saab.
An application to reorganize the Swedish-based unit was filed at a district court in Vanersborg, in southwestern Sweden, Saab spokeswoman Margareta Hogstrom said.
The Swedish government on Wednesday rejected a request from loss-making GM to inject money into the carmaker. GM, which is seeking help from the U.S. government to avoid bankruptcy at home, has been looking for buyers for Saab but said it needs more funding to spin off or sell the division.
"We explored and will continue to explore all available options for funding and/or selling Saab and it was determined a formal restructuring would be the best way to create a truly independent entity that is ready for investment," Saab's managing director, Jan Ake Jonsson, said in a statement.
The move would give Saab protection from creditors while it restructures in a process similar to a Chapter 11 bankruptcy in the U.S.
"Pending court approval, the reorganization will be executed over a three-month period and will require independent funding to succeed," Saab said, adding it would seek funding "from both public and private sources."
However, government officials seemed to rule out financial assistance. "I'm not sure what they're referring to, because support in the form of money is not on the agenda," Industry Ministry spokesman Hakan Lind said.
Industry Minister Maud Olofsson told Swedish news agency TT it was "very hard to say what our role will be."
On Wednesday, Olofsson rejected GM's plea for state funding for Saab, saying it was up to the U.S. automaker to save the brand.
In its own restructuring plan, GM said Tuesday it would need up to $30 billion from the U.S. Treasury Department, up from a previous estimate of $18 billion and including $13.4 billion it has already received. It also said it would need to cut 47,000 jobs worldwide and close five more U.S. factories
GM said it needed about $6 billion in support from the governments of Canada, Germany, Britain, Sweden and Thailand to provide liquidity for its overseas operations in those countries.
The Detroit automaker said it had developed a proposal that would cap its financial support of Saab with the Trollhattan-based automaker's operations "effectively becoming an independent business entity" by Jan. 1, 2010.
Saab has around 4,500 workers in more than 50 countries. Its main markets include the U.S. Britain, Sweden, Germany, Italy, Australia, France, the Netherlands, and Norway, with most of its production located in Sweden.