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October 11, 2011 01:00 AM

Saab's fate in balance as restructuring process falters

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    STOCKHOLM -- The administrator in charge of Saab's restructuring under court protection could pull the plug on the process, a Swedish daily newspaper reported.

    Saab is running out of cash and has still not received a bridge loan of 70 million euros ($96 million) that was secured by Chinese car company Youngman, money that is key to its short-term survival.

    Svenska Dagbladet said on Tuesday that negotiations were ongoing with Youngman, but the court-appointed administrator could decide to ask a court to end Saab's period of protection from creditors.

    Swedish news agency TT said the ending of the creditor protection process and possible bankruptcy was one of the options being considered at talks in Stockholm but that there were other alternatives.

    The administrator, Guy Lofalk, could not immediately be reached for comment.

    If the restructuring process looks unlikely to succeed, Saab's creditors, the administrator or Saab itself could ask for creditor protection to be withdrawn, Cecilia Tisell, a judge at the local court, told Reuters.

    She said the court had not received any request of that kind. "No, we have not heard anything like that at all from the Saab companies or Guy Lofalk," she said.

    Saab CEO Victor Muller told Reuters in a phone text message: "Things are moving along fine and we do not intend to request the replacement of Mr. Lofalk as administrator."

    Swedish media have reported tensions between Lofalk and Saab after Lofalk reportedly raised the idea that the government should take over Saab's debt to the European Investment Bank in return for shares in the carmaker, which it would then sell to a Chinese car producer.

    Any decision to end the reconstruction process would be Lofalk's, Muller added.

    Saab spokeswoman Gunilla Gustavs said the carmaker still expected to get the bridge loan. "We are still expecting the Youngman loan to come in," Gustavs said.

    She had no comment on when the money was expected or how long Saab could last without the cash.

    Saab has struggled for months to stave off collapse, seeking new investors and selling off assets so it could pay suppliers and employees and resume production at its plant in Sweden.

    The company won breathing space from creditors in late September, but still needs fresh money to pay wages and suppliers while it restructures.

    Saab hopes protection from creditors would allow it to survive until China's authorities approve a 245 million euro ($336 million) investment by Youngman and Chinese car dealer Pangda.

    A decision by China's NDRC could come as early as Friday.

    Svenska Dagbladet quoted Swedish Debt Office spokesman Daniel Barr rejecting media reports the government could pay off Saab's debt to the European Investment Bank and convert the security on the loan to shares in Saab. "No, the Debt Office does not have any such mandate," he said.

    Last hope

    Youngman looks to be Saab's last hope of surviving.

    On Tuesday, Xu Heyi, chairman of BAIC, previously called Beijing Automotive Industry Holding Co., said his company had no interest in participating in any rescue plan for Saab. BAIC owns some rights to Saab's old platforms.

    Zhejiang Geely Holding Group has no wish to get involved in a Saab rescue even though it was invited by a Swedish court to help with Saab's restructuring, the company's public relations director, Yang Xueliang, said in his blog published at Sina.com.

    He confirmed that the court overseeing Saab's restructuring has entrusted a third party to contact Geely with the hope that the Chinese company could aid Saab's restructuring.

    Geely's executives met the third party's representative, Yang said in the blog. But all this was done out of courtesy, he added.

    Geely acquired Volvo Cars from Ford Motor Co. in 2010.

    Sources: Reuters, Automotive News China

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