GM runs due diligence on Saab bidders: source

NEW YORK (Reuters) - General Motors Corp is running due diligence on about 10 bidders for Saab, after the first round of bids for the Swedish brand attracted Chinese automakers, European investor groups and private equity firms, a source familiar with the matter told Reuters.

The Saab auction process is being run independently of GM's efforts to sell other European assets including Opel, the source said.

GM has until the end of June to sell Saab, the source said.

Another source with knowledge of the auction said China's Geely Automobile Holdings is one of the bidders for Saab.

A few Geely executives toured Saab's production and research-and-development facilities in Sweden last month, and were given presentations by the automaker's management team, the source said.

GM has given management presentations and tours to all of the bidders in the last month, both sources said.

A source had told Reuters in early March that Saab had received interest from several potential bidders including Geely.

Saab sought protection from creditors in February to survive the current economic downturn and buy time to find a new owner after GM decided to cut its ties with the brand.

After including the sale of Saab as part of its restructuring plan in December, GM said in February it would like the brand to become an independent business by 2010.

Saab then filed to reorganize under court protection in Sweden, a process similar to Chapter 11 bankruptcy protection in the United States.

FIAT WANTS SAAB

Saab, currently under reorganization, aims to win court approval for an extended period of creditor protection on May 20.

Italian automaker Fiat SpA, which has agreed to acquire a stake in Chrysler LLC, has said it wants to merge its car unit with GM's European operations, which include Opel and Saab, to create the world's second-largest automaker after Toyota Motor Corp.

But Fiat did not bid in the first round of the Saab auction, both sources told Reuters. Fiat said on Wednesday it has spoken with the Swedish government about buying Saab, and GM responded by saying it would welcome any talks with Fiat.

GM bought 50 percent of Saab in 1990 for about $700 million. It paid $125 million and assumed debt for the remainder of the unit in 2000.

But with auto sales at record lows -- Saab sales fell 35 percent in 2008 -- any likely buyer is expected to take over the brand at a heavy discount.

Saab said it lost about $340 million in 2008 and projected a similar loss this year due to slack demand, an aging vehicle line-up, overcapacity and high costs.

GM Vice Chairman Bob Lutz said in January that Saab had never made money for GM in the nearly two decades it has owned the brand.

GM, which has lost more than $82 billion since 2005, has received $15.4 billion of federal funding and expects to receive up to $18 billion by June 1. It has said it may possibly need to borrow up to $27 billion.

The White House-appointed autos task force has given GM until June 1 to come up with a restructuring plan that cuts costs and debt levels, or be steered into a bankruptcy.

(Reporting by Jui Chakravorty Das; editing by Carol Bishopric, Matthew Lewis and Steve Orlofsky)