December 19, 2011 / 10:05 AM / 8 years ago

UPDATE 4-Saab heads for scrapyard as long rescue quest fails

* Famed Swedish car maker files for bankruptcy

* Former owner GM blocks deal with Chinese

* End comes after almost a year of turmoil

* Will have ‘massive impact’ on local region

By Johan Ahlander

TROLLHATTAN, Sweden, Dec 19 (Reuters) - Famed Swedish car maker Saab was declared bankrupt by a court on Monday, ending a nine-month survival battle by its Dutch owner.

Saab, which has made cars for 64 years, has suffered cash problems since March after 2010 sales fell short of target amid the disruption of its sale by General Motors.

It has not made any vehicles since April and several rescue attempts have failed.

Saab owner Swedish Automobile said former owner and key licence holder General Motors had blocked a last-ditch rescue plan by Chinese investor Youngman.

It also criticised the court-appointed administrator who had been overseeing its creditor protection process and who, it said, had meddled in the deals.

Saab proposed a new rescue involving Zhejiang Youngman Lotus Automobile, but that was rejected by GM at the weekend.

“That, basically, was the last nail in the coffin of this beautiful company,” Swedish Automobile Chief Executive Victor Muller told reporters hours after handing in a request to a Swedish court to have Saab made bankrupt.

The court later approved the request and appointed two receivers to run the company. Swedish Automobile shares, which had been suspended, fell 61 percent to 8 euro cents by 1600 GMT.

Muller said there was interest from investors to take over Saab, though that would still need GM’s approval.

GM, Saab’s former owner, still licenses key technology to it on which the building of Saab cars depends, and has a small shareholding.

Analysts said GM had probably been seeking to protect its Chinese co-operation with state-run SAIC Motor Corp Ltd (Shanghai Automotive). Muller agreed.

“I think what they are concerned about is that the technology licensed by Saab will go back on the Chinese market and compete with their — basically same technology — in the joint venture with Shanghai Automotive,” Muller added.

Citi analyst Itay Michaeli had similar thoughts.

“Maybe in their mind, you might as well kill a competitor, kill a brand and safeguard the technology,” he said.

GM spokesman James Cain said the U.S. group had been open all along with Saab, and had helped over “many months”.

“We couldn’t support the proposals and we have been very consistent, very clear and very honest, because we felt that was important for Saab and their prospective partners and all the other stake holders as they work to find a solution,” he added.

Muller reserved his worst vitriol for the administrator, Swedish lawyer Guy Lofalk, who had been overseeing Saab’s protection from creditors, which it entered in September.

“I have a lot of irritations but my irritation for Mr. Lofalk is higher than that for GM ... I can’t see the reasoning Mr. Lofalk had when he started to unravel my deal, other than that he, at whatever price, wanted to change ownership,” Muller said.

Lofalk has said he informed Saab all along of what he was doing.


The company employs about 3,500 people, though officials have said many more would be affected by a closure, including suppliers. “I feel emptiness and frustration,” Fredrik Amlqvist, a car builder for almost 17 years, told reporters.

“I looked out at my two Saabs in the yard this morning. I had tears in my eyes, I have to admit.”

Long-time Saab employee Stefan Karlsson said he feared for the future of the whole region where the company is based.

“I know there will be much unemployment. Then there’s other issues, like exclusion and segregation. It will be a fight for jobs. It will have a massive impact,” he said.

Saab presented its first prototype in 1947 after moving out of aeronautical engineering and built a small, loyal following.

A separate Saab defence and security company still exists. General Motors bought 50 percent of the car company in 1990 and the rest in 2000.

It decided to sell the brand in 2009 after the financial crisis and came close to closing it before Swedish Automobile, then called Spyker Cars, bought Saab in January 2010.

Despite its well-known name, Saab was a niche player and analysts had questioned its future. It has the capacity to produce more than 100,000 cars a year running on two shifts.

Swedish rival Volvo, successfully rescued by China’s Geely Automobile Holdings Ltd in 2010, made almost four times that last year.

Muller had focused initially on getting Russian businessman Vladimir Antonov to invest, but his role was vetoed by the European Investment Bank (EIB), which has lent money to Saab.

Antonov was subsequently indicted by Lithuania for fraud and is fighting extradition from Britain.

A first Chinese investment deal with Hawtai Motor Group fell through in May, and Muller then agreed the failed deal with Chinese car distributor Pang Da and Youngman.

Muller, 52, is a former mergers and acquisitions lawyer who made his fortune from Dutch fashion brand McGregor before revamping loss-making luxury sports car maker Spyker, which he jointly owned with Antonov.

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