Saab Tells Court It Will Be Sold by End of June

Saab Tells Court It Will Be Sold by End of June

Swedish automaker Saab told a court in its homeland Monday that it has 20 "active" suitors and expects to be sold by the end of June. The automaker hasn't named those potential buyers. However, some indications are that Chinese and Swedish suitors are among them.

A Swedish court granted Saab an extension of the period it is protected from creditors to give it more time to restructure and find a buyer. Guy Lofalk, the lawyer in charge of Saab's restructuring, said the sale of Saab is a "crucial prerequisite for a successful reconstruction."

"So far a short presentation of Saab has been sent out and extensive contacts have occurred with interested parties," Lofalk said in a court document presented to creditors in court Monday.

Saab will be completely spun off from parent General Motors by January 1, 2010. The company sought protection from its creditors in February. Monday's hearing was a chance for creditors to challenge the reconstruction process and the court to decide on an extension of the bankruptcy protection from creditors.

Saab is expected to ask its creditors to write off 75 percent of its non-prioritized debts. Ailing GM is among its 1,000 creditors. Others include German tiremaker Continental AG, lighting manufacturer Hella KGAA and Magna Steyr Fahrzeugtechnik, which makes Saab's convertibles.

Saab also told the court that consolidation of production and new model launches will boost capacity utilization and the company can break even with an annual production of 130,000 vehicles. The automaker, predicting overall industry sales will rise and it will ride that wave, expects production levels of 150,000 cars in 2011, generating positive cash flow.

The company produced only 93,000 vehicles in 2008. Saab lost $370 million in 2008 and forecasts a similar loss this year.

Saab needs $1 billion to finance its restructuring, including the production consoliation and new model launches. Of that, it expects $600 million from the European Investment Bank and $400 million from GM in the form of debt write-offs and production equipment.

Michelle Krebs:  is Editor-in-Chief of AutoObserver.com. Follow @AutoObserver on Twitter.