Saab seeks bankruptcy protection in battle for survival

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Yellow Belt
Saab, the embattled carmaker, filed for bankruptcy protection today after losses threatened its survival.

The carmaker, owned by America's General Motors and famous for comparing its saloons to fighter jets, said that it would file for a reorganisation plan, a Swedish legal procedure which safeguards its assets from creditors.

"We explored and will continue to explore all available options for funding and/or selling Saab," Jan-Ake Jonsson, the managing director, said. "It was determined a formal reorganisation would be the best way to create a truly independent entity that is ready for investment."

Saab said that it would seek funding for the company from both public and private sources during the reorganisation process.

Yesterday it was reported that General Motors was prepared to pump in $400 million to help Saab to become profitable if the Swedish Government guaranteed to match its stake.

Unnamed sources told Dagens Industri, a Swedish daily newspaper, that the American company had made an offer to put 3.5 billion Swedish kronor (£280 million) into the firm if the Swedish Government guaranteed a 5.2 billion kronor loan to Saab.

Part of the money would be used to launch new models and part to cover the loss made by Saab last year. The goal is to help it to reach annual sales of between 120,000 and 130,000 vehicles, which would make the carmaker profitable by 2011 or 2012, the paper reported.

However, many analysts signalled that Saab would need considerably greater funds to turn it around.

The Swedish Government on Wednesday ruled out owning carmakers or their factories and accused GM of shirking its responsibility as an owner.

"The Swedish state is not prepared to own car factories," Maud Olofsson, the enterprise minister, said. "We are very disappointed in General Motors. But we are not prepared to risk taxpayers money, this is not a game of Monopoly."
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