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Saab in talks with 20 potential buyers

SAAB Automobile AB, the troubled Swedish unit of General Motors Corp, is in contact with about 20 potential buyers, with a sale planned to be completed in June, its lawyer said yesterday.

Lawyer Guy Lofalk, who is in charge of restructuring Saab, said a sale of the company 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," he said in a court document presented yesterday to creditors in the Vanersborg District Court.

Saab went into bankruptcy protection on February 20 in an effort by GM to spin off or sell it. The danger of a collapse still hovers over the ailing brand because neither GM nor the Swedish government appears ready to provide enough money to keep it going as a freestanding entity.

Yesterday's court hearing gave creditors an opportunity to challenge the reconstruction process. However, all creditors agreed to a continuation of the process, and the court ruled the bankruptcy protection can continue until May 20. Saab said it intends to apply for an extension of the protection period.

Lofalk said Saab plans to start negotiations with creditors in June to write down all non-prioritized debt by about 75 percent. Saab then expects to pay the remaining 25 percent within a year.

By improving efficiency and concentrating production to the site in Trollhattan in western Sweden, the company aims to reach break-even at a production of just below 130,000 cars, he said. The planned launch of three new models this year and next year is expected to help increase production. Last year Saab produced 93,000 cars.

Lofalk said Saab needs financing of around US$1 billion, of which US$600 million is expected to come from the European Investment Bank.

The remaining US$400 million is expected to be paid by GM, partly through writing down debt and partly by supplying tools for the manufacturing of Saab's new car models.


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