TROLLHATTAN, Sweden (Reuters) - Car maker Saab ran out of room for maneuver Monday when its Dutch owner filed for bankruptcy, calling time on a nine-month battle to rescue the struggling Swedish marque.
Saab’s cash problems began in March this year, after 2010 sales fell short of target. It has not made any vehicles since April.
The end of the road for Saab, which has been making cars for more than 60 years, came at the weekend when General Motors again vetoed a plan involving Chinese investor Zhejiang Youngman Lotus Automobile.
GM, Saab’s former owner, still licences key technology to it and has a small shareholding.
Saab owner Swedish Automobile said that after GM had informed Youngman it would not approve the plan, the Chinese company told Saab “the funding to continue and complete the reorganization ... could not be concluded.”
“The board of Saab Automobile subsequently decided that the company, without further funding, will be insolvent and that filing bankruptcy is in the best interests of its creditors.”
Swedish Automobile shares, which had been suspended, plunged
when trade resumed Monday. By 8:06 a.m. EST, the shares were down 71 percent at 6 euro cents.
Swedish Automobile said in the statement that it expected the court would approve the filing and appoint receivers soon.
At the company’s factory in the western town of Trollhattan, emotions among some of the workers ran high, even though they have been preparing themselves for the worst.
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.
“We have had a long time to prepare ourselves for this, but when it happens it still hits you,” he said.
“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.”
Saab presented its first prototype in 1947 after moving out of aeronautical engineering and built a small, loyal following.
A separate Saab defense 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.
When cash problems surfaced in March, production was halted. Saab briefly restarted output, but mounting debts to suppliers forced a stoppage in April, since when the plant has been idle.
Swedish Automobile Chief Executive Victor Muller stitched together a series of deals to rescue Saab, but General Motors said it could not accept an option involving Youngman.
GM, which operates in China in a partnership with state-run SAIC Motor Corp Ltd, said in November continuing to supply parts and technology to Saab’s new owners would run counter to the interest of its own shareholders.
Despite its well-known name, Saab was a niche player and analysts had questioned its future even if Muller had kept the company afloat.
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 and plans to sell 50,000 cars in China alone this year.
Muller’s efforts to keep Saab afloat 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.
Muller later turned to Chinese investment and first lined up Hawtai Motor Group in May, but that fell through. He 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.
Reporting by Patrick Lannin and Veronika Ek; Editing by Erica Billingham and David Hulmes