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Filing for creditor protection, Sweden's Saab is seeking independence from U.S. parent General Motors. One solution may be more cooperation with German GM unit Opel
Saab filed for insolvency protection on Friday morning, just days after American parent company General Motors signalled it would seek to divest itself of the Swedish carmaker. The development was only the latest in what has become an existential crisis for GM's European units, which include Sweden's Saab and Germany's Opel—firms that are deeply ingrained in the national identity of both countries.
"We explored and will continue to explore all available options for funding and/or selling Saab, and it was determined a formal reorganization would be the best way to create a truly independent entity that is ready for investment," Saab Managing Director Jan-Ake Jonsson said in a statement released Friday morning.
GM is currently seeking as much as $13.4 billion in emergency bridge loans from the US government to save it from bankruptcy, and on Tuesday it presented a restructuring plan in which it said it planned to phase out Saab by 2010. GM said it would cut 47,000 jobs worldwide, including 26,000 outside the United States. In addition to Opel in Germany and Vauxhall in Britain, Saab is one of GM's main businesses in Europe.
The US automobile giant, which acquired a majority stake in Saab in 1990, supported the company's move to seek court protection from creditors as the best way to create an independent entity. A Swedish court on Friday approved the application, which means Saab will be protected from creditors as it restructures its debt and seeks new funding. Saab said it plans to present a restructuring proposal within three weeks.
Saab sold 94,000 cars last year, but it also posted losses of 3 billion Swedish crowns ($343 million) in 2008. The GM unit estimates it will lose roughly the same amount this year. Speculation of Saab's insolvency had grown in recent days after the government in Stockholm rejected the carmaker's requests for loans. Last year, the company sold 94,000 cars.
The company said its 4,100 Swedish workers would continue manufacturing operations and designing cars under court-appointed administration as Saab seeks to find financing to become an independent carmaker.
Will GM Leave Europe?
Earlier this week, GM CEO Rick Wagoner also stated for the first time that the company might be preparing to divest itself of parts of Opel, as well. Experts say that GM's European units would stand little chance of survival without finding major partners.
One possible restructuring plan would be for Saab to team up with Opel. The Stockholm-based paper Expressen reported on Friday that the company was also in fast-track talks with Opel, GM's crisis-striken German subsidiary, to possibly join forces without their American parent.
The head of the Opel works council, which represents the interests of employees, at the company's plant in Bochum, Germany, said the carmarker could seek to merge with other companies. "There are currently several automobile companies in Germany and abroad who are looking for solutions." Analysts have suggested French carmarkers Renault and PSA Peugeot Citroen as possible partners. And investments by Chinese automakers could also be a possibility.
Opel employs more than 25,000 at its German plants in the states of Hesse, North Rhine-Westphalia, Rhineland Palatinate and Thuringia. The company said it would present a restructuring plan government officials had called for "very soon." "We are pulling out all the stops" to get that done, a company spokesperson said. The company is currently seeking government bridge loans and Spiegel reported on Friday that Opel's liquidity needs have surged dramatically to €3.3 billion ($4.16 billion). Earlier, it had been expected to seek €1.8 billion.
German Economics Minister Karl-Theodor zu Guttenberg said any bailout would be coupled with measures "securing jobs." He also said the company must "conclusively show how it will find its way back to business success."
Some conservatives in Germany have expressed skepticism about any bailout plan for Opel. Horst Seehofer, the powerful governor of the southern German state of Bavaria, who is with the Christian Social Union party, said that while Opel's request for state aid was "justifiable, we also need to determine where the borders are for state intervention. It's not helpful to anyone if the government isn't careful with taxpayers' money and acts as if it can prevent the insolvancy of every single company."