General Motor’s Swedish unit Saab is seeking to write off about three quarters of its non-prioritized debt, aiming for positive cash flow by 2011, a turnaround plan presented to creditors showed on Monday.
The loss-making carmaker meets with creditors in court on Monday, seeking fresh funds and a new lease of life under a new owner which it said it expects to be in place by June.
“During the reorganization Saab plans to begin negotiations with creditors on writing down the company’s non-prioritized debts by about 75%,” court-appointed administrator Guy Lofalk said in the filing obtained from the court.
A deal on the debt was expected to be concluded in July this year, with a payment to creditors a year later. Saab’s administrator said that around 20 potential buyers are looking at the company and that a deal is expected to be completed in June.
Saab sought protection from creditors in February to survive the economic downturn and buy time to find a new owner after its US parent, itself facing huge debts and an uncertain future, said it would cut its ties with the brand by Jan.1, 2010.
At the creditors’ meeting at the local court in Vanersborg, in southwest Sweden, court-appointed administrator Guy Lofalk is to report on the progress of the business reorganization to turn Saab into a profitable business by 2011.
The court will decide after the meeting, whether or not to let the restructuring process to continue after hearing any objections from the group’s creditors.
Lofalk said in the filing that a concentration of production and the launch of new models would boost capacity utilization at the company while efficiency measures lowed its breakeven level to an annual production rate of 130,000 vehicles.
“Saab also expects a positive cash flow already in 2011 as well as good returns at a production level of 150,000 cars,” Lofalk said in the document obtained from the court.
Saab needs $1 billion of financing to help it overhaul production and launch new car models. It aims to raise $600 million of that sum from the European Investment Bank while GM would inject $400 million in the shape of debt write-offs and production equipment, the court filing showed. (Reuters)