Sweden's government admitted yesterday that time was running out to save Saab Automobile from liquidation after the collapse of a rescue deal for the lossmaking carmaker.
While General Motors could still find a buyer for Saab, analysts and company insiders said the likeliest scenario was that the 60-year-old carmaker would be wound up.
Saab was known in its heyday for the sleek and distinctive design of its cars, which earned a loyal following among customers wanting a sportier alternative to more mainstream family vehicles.
Saab split from its parent defence and aviation group in 1990, when GM took a
50 per cent stake. The US carmaker gained full control a decade later but the losses continued.
Maud Olofsson, Swedish enterprise minister, said Stockholm had not given
up hope that GM would find a new buyer, but added: "For every day that passes, the challenge gets bigger and bigger."
GM's board is due to discuss scenarios for Saab, alongside other issues facing the US governmentcontrolled carmaker, at a meeting on Tuesday.
Saab's future was thrown into doubt on Tuesday when Koenigsegg Automotive, the Swedish sports car maker, pulled out of a provisional deal to buy it after months of negotiations at the head of a consortium that also included China's Beijing Automotive Industry Holding Corp.
The bid fell apart after tensions between Koenigsegg and BAIC and problems securing a Swedish government guarantee for a €400m ($603m) European Investment Bank loan needed to close the deal, two people close to the talks said yesterday.
Saab said yesterday that it and GM were "now assessing the situation and we expect direction as to the next steps next week".
People close to the situation said there did not appear to be any alternative bidders, raising the prospect that GM could choose to put the company into liquidation.
"They've got bigger things on their plate," a person briefed on GM's thinking said, mentioning its €3.3bn plan to restructure its much larger Opel/Vauxhall business.
Sweden's government says it is willing to offer credit guarantees to help a private buyer acquire Saab, but has ruled out a public bail-out for the company if GM fails to strike a deal.
GM said in February that it would sell Saab, or close it down in 2010 if it failed to find a buyer. Saab soon after filed for reorganisation in Sweden.
When cutting loose Saab, GM equipped it with a dowry of $500m, including about $150m to produce a version of its 9-5 model unveiled in September.
The company would not confirm yesterday how much cash it now had, but noted that it had cut its debt by 75 per cent during the reorganisation, which it exited on August 21.
Analysts said that GM would struggle to find a buyer for Saab, given the length a fresh negotiation would take with an investor, the Swedish government and the EIB.
"They can't find investors if [GM] are talking about pulling the plug on December 31," said Tim Urquhart, senior analyst with IHS Global Insight.
US financial investor Ira Rennert's Renco Group earlier this year expressed tentative interest, as did a group of Wyoming-based investors. Fiat also said it would acquire Saab as part of a now-shelved plan to take over Opel and merge it with Fiat Auto and Chrysler.
Saab's market share and sales have dwindled in recent years as its model portfolio aged, the byproduct of GM's financial problems in the US.
In Europe, Saab sold fewer than 24,000 cars in January to October of this year, a 59 per cent drop on a year ago. It sold slightly more than 98,000 worldwide last year - small volumes even for premium carmakers commanding higher prices.
In the event of a liquidation, Saab's manufacturing assets or intellectual property might be of interest to BAIC or another Chinese carmaker for use in their home market.
BAIC, which was talking to Saab about producing its cars in China before the deal collapsed, said yesterday that it was reviewing its options and remained interested in overseas assets.
"BAIC states that becoming more international . . . has always been our strategic focus."
"With regard to Koenigsegg's withdrawal, we will carefully evaluate this project anew and make appropriate arrangements."
A person close to rival Chinese carmaker Geely, which toured Saab's facilities early this year and is in talks to buy Volvo from Ford Motor for nearly $2bn, said it was "absolutely not" interested in buying the carmaker or its assets.
Source:ft.com/
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