(Updates with company statement in the sixth paragraph and choice of reorganization attorney in the 10th.)
Sept. 21 (Bloomberg) -- Saab Automobile staved off bankruptcy after a Swedish court granted the struggling carmaker’s appeal for protection from creditors, giving it a chance to restart production.
The Court of Appeal for Western Sweden today approved Saab’s request for voluntary reorganization, overturning a lower tribunal’s ruling, according to a decision posted on the Gothenburg-based court’s website. The decision halts pending bankruptcy petitions filed by creditors.
Saab’s chances “have increased quite drastically as they have the time now to reorganize and get possible funding from China,” said Martin Crum, an analyst at Amsterdams Effectenkantoor BV. “It’s essential now that they figure out a way to deal with the suppliers. There’s still huge uncertainty.”
Saab, which General Motors Co. sold last year, first halted production in late March after suppliers stopped delivering parts because they hadn’t been paid. Assembly at the main factory in Trollhaettan has been quiet since early June. In August, it delayed paying wages for the third consecutive month, prompting unions to try and force the carmaker into bankruptcy in an effort to secure state coverage of their salaries.
Swedish Automobile, Saab’s owner, surged as much as 41 cents, or 46 percent, and was up 29 percent at 1.15 euros as of 4:43 p.m. in Amsterdam. The share has plunged 67 percent this year, valuing the Zeewolde, Netherlands-based company at 31.1 million euros ($42.5 million).
As part of its reorganization, Saab will begin an effort to establish a “more flexible and more competitive cost structure” that may involve cutting jobs, Swedish Automobile NV, the carmaker’s Dutch owner, said in a statement.
“This is fantastic news, not the least for the employees that will get their salaries,” Eric Geers, a Saab spokesman, said by phone about the court decision. “But while this improves our circumstances a lot, we’re still facing a huge challenge.”
Saab will now restart payment and delivery negotiations with its suppliers, which the company has said it owes 150 million euros ($205 million), Geers said. It’s “very hard to judge” whether Saab will be able to restart production this year, he said.
State Wage Guarantee
The reorganization ensures that the Swedish state will cover salary payments for at least three months, a period that could be extended up to a year, Geers said. The workers should get their missing August salary “in a few days,” he said.
The Vaenersborg District court today named Swedish attorney Guy Lofalk to head the reorganization effort, approving Saab’s request. Lofalk also oversaw Saab’s previous reorganization in 2009.
Darko Davidovic, counsel at IF Metall, Saab’s biggest union with about 1,500 members, said it’s crucial that Saab resumes assembly lines as fast as possible.
“Now it’s about restarting production and making money,” Davidovic said by phone. “They must sell cars. It doesn’t help how much financing they get if they don’t earn money.”
IF Metall filed a petition yesterday to put Saab into bankruptcy, becoming the fourth creditor after Japanese seat- belt and air-bag maker Takata Corp. and two other unions appealed to the courts. The ruling by the appeals court in Gothenburg today overrides those petitions for at least three months, according to Swedish law.
Deutsche Bank AG is prepared to extend Saab a 70 million- euro bridge loan after Zhejiang Youngman Lotus Automobile offered collateral to back the payment, two people familiar with the matter said Sept. 19. Swedish Automobile said on Sept. 12 that it agreed to sell the rights to use its new vehicle platform to Youngman for 70 million euros, providing the basis for the collateral.
Saab has other financing agreements in place. Swedish Automobile, formerly known as Spyker, agreed in June to sell a 29.9 percent stake to Youngman for 136 million euros. Pang Da Automobile Trade Co., China’s biggest dealer by market value, offered to pay 109 million euros for a 24 percent stake. Regulators and GM must still approve the deals.
--Editors: Kim McLaughlin, Chris Reiter, Chad Thomas
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