Saab board meets amid reports of reorganisation
Thursday 19 February 2009
The board of General Motors' Saab met today, a union representative said, amid reports the Swedish carmaker was set to file for protection from creditors
.Earlier today, Swedish public service radio reported, without disclosing its sources, that Saab's board had called an extraordinary meeting to decide on a reorganisation of the carmaker.
A reorganisation filing, which is an alternative to an outright bankruptcy filing, would be made with a Swedish court after which the viability of continuing operations is assessed.
"There has been a company board meeting, it has not really finished yet, and it started around 1100 (CET)," said Micael Lindell, a union representative at Saab.
Lindell said he had no information on what was discussed at the meeting, but the board's union representatives and Saab's management had a meeting scheduled at 1500 CET (1400 GMT).
A Saab spokeswoman declined to comment.
GM said earlier this week that Saab could file for reorganisation as early as this month and that it still hoped to reach an agreement with Sweden on aid for the brand.
However, the Swedish government on Wednesday ruled out owning carmakers or their factories and accused GM of shirking its responsibility as an owner and that talks over state aid for Saab lacked a realistic basis.
Martin Skold, an assistant professor at the Stockholm School of Economics, who analyses the car industry, said the reorganisation would need to define the legal relationship between Saab and its parent GM.
Cutting legal ties could save GM hundreds of millions of dollars in costs if Saab were to go bankrupt.
In a business reorganisation, the company seeks protection from creditors while it comes up with a plan to become profitable. It is an alternative to bankruptcy, said Sven Save at Ackordscentralen, a Swedish consultancy firm which handles insolvency issues.
A reconstruction plan could mean measures such as job cuts, a sale of assets or a debt writedown.
Creditors who risk not getting any money at all if the company goes bankrupt, have to be convinced at a first court hearing that lowering their claims is in their best interest.
If no creditors object to the plan at the start of the procedures, they cannot demand a liquidation of the company in a later stage of the reorganisation which can last up to a year.
Joran Hagglund, state secretary at the Swedish Industry Ministry, said he had no information on if Saab was set to apply for reorganisation and that the government was monitoring developments.
"We continue to analyse the situation and what can happen if there is a reorganisation," Hagglund told Reuters.
GM said in its restructuring plan submitted to the U.S. Treasury on Tuesday that it would cap its financial support for Saab and aimed for the Swedish unit to become an independent business as of 1 January, 2010.
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