Chinese in queue for Saab
BY IAN PORTER | 7th Apr 2009
The one thing they will have going for them is a company with a low cost base, because Saab creditors have not objected to a plan for Saab to pay them just 25 cents in the dollar.
Saab put the plan to a Swedish court and, in the absence of objections, was granted an extension of the period during which it is protected from its creditors.
The extension to May 20 will allow Saab to pursue the restructuring plan, which will involve the redemption of debt at one quarter of its face value.
However, the court was told that Saab would need to borrow a further $US1 billion ($A1.4 billion), with most coming from the European Investment Bank.
A representative from GM and an officer of the Swedish tax office both told the court they supported the proposed debt buyback.
A deal to buy the company is expected to be completed in June, said Guy Lofalk, the administrator appointed to Saab by the court.
Mr Lofalk said 20 potential buyers were still interested in acquiring Saab, which effectively has been on the market since GM revealed its own viability plan, which indicated GM will cut ties with Saab by next January 1.
Among the companies interested in buying Saab are Chinese car-maker Dongfeng and several Swedish industrial groups, according to Automotive News Europe.“During the reorganisation, Saab plans to begin negotiations with creditors on writing down the company’s non-prioritised debts by about 75 per cent,” Mr Lofalk said.
However, the negotiations with creditors are not expected to be completed until July. Payment would be made a year later.
In his submission to the court, Mr Lofalk said the reorganised Saab would have a breakeven point of 130,000 vehicles a year.
This appeared optimistic given that Saab made only 93,000 cars in 2008 and had forecast that 2009 and 2010 would be lower than that.
However, he said the company expected to record a positive cash flow in 2011.
It would generate “good returns” when it reached a production level of 150,000 cars, Mr Lofalk said.
In 2008, Saab lost 3 billion Kronor ($A521 million). It reduced the workforce by 750 people last month, from 4100 to 3350.