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In a desperate bid for survival, Swedish car maker Saab Automobile AB Friday applied for credit protection so that it can be reorganized and said it will seek to become fully independent from its owner, General Motors Corp. (GM).

Sweden's government, meanwhile, maintained its arms-length approach, saying it doesn't plan any support for Saab, though it didn't rule out the possibility of guaranteeing loans that Saab has sought from the European Investment Bank.

Saab said it hopes the court process over three months will transform it into a functioning company that is fully independent from its struggling Detroit-based owner. To accomplish this it will seek fresh funding from private and public sources, it said.

Saab will present its reorganization plan to creditors within three weeks, it said.

A senior Swedish government official Friday denied the state was preparing any direct support for Saab. "No, it isn't," state secretary Joran Hagglund at the Swedish Ministry of Enterprise, Energy and Communication, told Dow Jones Newswires.

Hagglund said expectations shouldn't be high for the future of Saab, which has been generating losses consistently over the years.

"[Let's picture] Saab as an independent car company with ... low sales volumes," he said. "If you listen to analysts, then they say there's not a chance such a company can survive. So what I'm really saying is that you should keep your expectations very low."

He added: "In the competitive situation there is right now, one can't hope for big miracles."

Saab last year sold fewer than 94,000 cars, down from about 125,000 vehicles in 2007. Its best-ever year was in 2006, when it sold 133,000 cars, making it a tiny player in the global auto industry.

Saab was created in 1937 with the purpose of making airplanes for the Swedish Air Force, but soon turned to making cars. GM bought a 50% stake in 1990 and acquired the rest in 2000.

GM, as part of its effort to secure more loans from the U.S. government, had sought five billion Swedish kronor ($572 million) from the Swedish government. Sweden Wednesday rejected that request.

Saab in recent days has applied for a loan, believed to be about SEK5 billion, from the European Investment Bank. But Hagglund said Sweden would guarantee such a loan only if Saab first presents it with a firm business plan.

"It's the same for (Saab) as for everybody else," he said. "There must be a reliable business plan. No guarantor would step in if they know (the borrower couldn't repay the money because of dire business prospects). We would look at the whole business situation."

He said Sweden, under existing law, may for a limited time pay Saab employees' salaries if the company runs out of cash. Hagglund said he didn't know if that could be the case "tomorrow or in a month."

It remained uncertain Friday where, if at all, Saab may find the money it needs to survive as an independent company.

Swedish investment fund Investor AB (INVE-B.SK), a former stakeholder in Saab Automobiles until 2001, declined to comment on whether it would be interested in taking a stake in Saab again.

Saab Chief Executive Jan-Ake Jonsson said in a statement that Saab over the next 18 months is ready to launch three new models: the 9-5, 9-3X and 9-4X. He said that reorganization would help it "get these products to market while minimizing the liquidity impact of Saab on GM."

Sweden in Decembers presented a SEK28 billion aid package for its auto sector. Most of it, SEK20 billion, consists of guarantees of EIB loans.

Sweden's other car maker, Volvo Cars, a unit of Ford Motor Co. (F), at the end of January applied to the EIB, backed by Sweden, for EUR475 million.

 
   Company Web site: www.saab.com, www.gm.com, www.volvocars.com 
 
   -By Ola Kinnander, Dow Jones Newswires; +46-8-5451-3097; ola.kinnander@dowjones.com