* Court approves extension to creditor protection
* Saab to negotiate 75 pct cut in debt with creditors * Car-maker aims for positive cash flow in 2011
* Administrator says 20 parties eyeing company, sale soon
(Adds size of debts, CEO comment)
By Sven Nordenstam
VANERSBORG, Sweden, April 6 (Reuters) - Loss-making carmaker Saab won more time to restructure after a Swedish court on Monday extended the period in which the General Motors' GM.N unit is protected from creditors.
The court in Vanersborg, Sweden, approved the extension after no creditors opposed Saab’s proposed reorganisation plan, which envisages asking creditors to write off 75 percent of the company’s 10.6 billion crowns ($1.34 billion) total debt.
“The court has decided that the reconstruction can continue until May 20 at the latest, if no other decision is taken before then,” a court official said.
Saab sought protection from creditors in February as it sought to survive the economic downturn and buy time to find a new owner, after GM said it would cut ties with the brand by Jan. 1, 2010. [ID:nSAT006082]
Court-appointed administrator Guy Lofalk said in the filing obtained from the court that deal on the debt was seen concluded in July this year, with a payment to creditors a year later.
A senior tax representative for the Swedish state and a representative GM, Saab’s biggest creditor to Saab with over 90 percent of debts, told the court they supported the plan.
Lofalk said about 20 potential buyers are looking at the company and a deal is expected to be completed in June.
“So far short descriptions of Saab, so called teasers, have been sent out and comprehensive contacts have been undertaken with different interest parties,” he said.
Saab’s Chief Executive, Jan Ake Jonsson, told journalists the list of potential buyers included more investment companies than industrial groups. Saab has previously said both Swedish and Chinese interests were eyeing Saab.
Auto analysts have said creditors were likely to give their approval for the reorganisation, preferring it over an outright bankruptcy in the hopes Saab will be able to find a new owner willing to invest enough in the business for it to survive.
Lofalk said in the filing that a concentration of production and the launch of new models would boost capacity utilisation at Saab, while efficiency measures lowered its breakeven level to an annual production rate of 130,000 vehicles.
“Saab also expects a positive cash flow already in 2011 as well as good returns at a production level of 150,000 cars,” Lofalk said.
The court document showed Saab expected to have lower volumes both this year and next, compared with the 93,000 units produced in 2008, but that a gradual recovery in auto markets as well as the broader economy would benefit the company.
Saab needs $1 billion of financing to help it overhaul production and launch new models. It aims to raise $600 million of that from the European Investment Bank while GM would inject $400 million in the shape of debt write-offs and production equipment, the court filing showed.
The company, is one of Sweden’s best-known brands, booked a loss of about 3 billion crowns ($370 million) last year and expects a similar loss in 2009. [ID:nSAT006085]
A global auto market collapse, sparked by the financial crisis and ensuing economic downturn, has plunged the whole sector into crisis, including GM.
Last month, U.S. President Barack Obama ordered GM and rival Chrysler to accelerate their survival efforts and brace for possible bankruptcy. [ID:nSP207882]
In March, Saab said it would cut 750 jobs from 4,100 in Sweden. (Reporting by Sven Nordenstam and Johannes Hellstrom; Writing by Niklas Pollard; Editing by Guy Dresser and Andrew Macdonald) ($1=7.892 Swedish Crown)