GM Says Saab Unit Could File For Reorganization This Month

   DOW JONES NEWSWIRES 
 

General Motors Corp. (GM) said Tuesday its Saab subsidiary could be forced to file for reorganization as early as this month if the U.S. auto maker and the Swedish government can't come to terms on financial support for the unit.

GM, as part of a revamped restructuring plan presented to the federal government to qualify for billions of dollars in government aid, said that it has proposed to effectively cap its financial support for Saab, with the Swedish brand becoming an independent entity by the start of 2010.

"While GM hopes to reach agreement with the Swedish government, the Saab Automobile AB subsidiary could file for reorganization as early as this month," GM said in a press release accompanying the plan.

GM opted to put Saab up for sale after completing a strategic review of the brand, but the company feels it needs support from the Swedish government before completing any sale.

GM Chief Operating Officer Fritz Henderson said during a press conference Tuesday that the company hasn't had any problems in its negotiations with Swedish authorities. He added, however, that if GM's plan doesn't match the objectives of the Swedish government, the company must consider its options for Saab.

Earlier Tuesday, Sweden's minister for enterprise and energy said that Saab wants to tap the European Investment Bank for emergency funding. Maud Olofsson told Swedish television that "it is clear that GM wants to sell Saab," adding that the government will act as a guarantor for any EIB loan to Saab.

Discussions on securing a loan initially took place between Saab, GM and the Swedish government at the start of December. Swedish press reports say Saab is seeking to borrow as much as EUR475 million.

Around three-quarters of a rescue plan for the Swedish car industry amounting to 28 billion kronor (EUR2.7 billion) consists of Swedish government guarantees for loans from the EIB.

GM, which seeks as much as $16.6 billion in additional U.S. government aid as it strives to avoid bankruptcy, is also planning to sell or close its Hummer truck brand this year and Saturn in 2011 if no alternatives arise.

-By Stephen Wisnefski, Dow Jones Newswires; [phone]; [e-mail]