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Chinese companies plan to cut 500 jobs, invest $933 million to revive Saab
STOCKHOLM (AP) ' A Swedish court ruled Monday that Saab can continue its reconstruction after reviewing two Chinese companies' plans to invest euro660 million ($933 million) in the struggling brand and cut 500 jobs.
Vanersborg District Court made its ruling after reviewing the plans by Zhejiang Youngman Lotus Automobile Co. and Pang Da Automobile Trade Co. and hearing comments by creditors, said court spokesman Peter Rosen.
The two Chinese companies said they can provide euro50 million ($71 million) in immediate bridge-financing to the car maker while it is being reorganized. They also plan to inject euro610 million ($863 million) to restart production, settle the company's debts and fund operations between 2012 and 2013.
The companies reached a tentative deal on Friday to buy Saab from Swedish Automobile, the Dutch company previously known as Spyker Cars, for euro100 million ($141 million) ' the latest rescue attempt for the company, which has been fighting for survival since it was sold by General Motors Co. in 2010.
Production at Saab's manufacturing plant has been suspended for most of the year while the company has struggled to pay suppliers and staff. In September it entered a reorganization process similar to Chapter 11 bankruptcy protection in the United States.
The Chinese companies' financing plan was presented to creditors at the Vanersborg District Court Monday by Guy Lofalk, who is in charge of the reorganization.
Part of the plan would be to use a euro63 million ($89 million) credit from the European Investment Bank and to cut Saab's costs by around 1 billion kronor ($157 million), including laying off 500 of its 3,700 workers.
The companies said they will continue to make cars at Saab's main plant in Trollhattan, southwest Sweden, and also begin more cost-efficient production in China for Chinese and international markets.
The program also includes plans to accelerate access to the Chinese market and enter into new distribution agreements in other emerging markets, such as Russia.
The two companies set a sales target for Saab for 2012 of 35,000-55,000 cars and 75,000-85,000 cars for 2013.
In the long term, the new owners hope to increase sales to 185,000-205,000 cars. They said key factors driving growth would be a broadened product portfolio in fast growing market segments, capitalization on access to the Chinese market and a strong focus on profitability.
Malin Rising can be reached at http://twitter.com/malinrising