Sweden rules out state bail-out for Saab - New parties show interest in GM unit

Sweden rules out state bail-out for Saab - New parties show interest in GM unit
By Andrew Ward in Stockholm
Copyright The Financial Times Limited 2009
Published: November 27 2009 17:40 | Last updated: November 27 2009 17:40
http://www.ft.com/cms/s/0/3aca2404-db7b-11de-9424-00144feabdc0.html


Sweden’s prime minister has ruled out a government bail-out for Saab Automobile and warned that European leaders must not stand in the way of efforts to tackle overcapacity in the car industry.

Fredrik Reinfeldt said his government would offer credit guarantees if General Motors could find a buyer with the “powerful resources” needed to turn Saab round, as it emerged that the US carmaker had received fresh approaches for its Swedish unit.

But the government would not intervene if GM chose to liquidate Saab after a consortium led by Koenigsegg Automotive, the Swedish maker of high-performance sports cars, pulled out of a deal to buy the company this week.

“We have been very clear that we do not put taxpayer money intended for healthcare or education into owning car companies or covering losses in car companies,” Mr Reinfeldt told the Financial Times.

“You cannot save jobs just by pushing in taxpayers’ money if you don’t have the competitiveness to survive in a tough industry with overcapacity.”

Saab on Friday said GM had received expressions of interest from “more than one” potential bidder since Koenigsegg pulled out.

Merbanco, a Wyoming-based merchant bank that was linked with Saab in the past, is among those to have contacted GM, according to people close to the situation.

But Mr Reinfeldt said any bidder would need to prove its financial strength before receiving government backing. “Anyone coming close to today’s Saab [would] need resources to cover losses and also to cover investment in development of the company,” he said.

Mr Reinfeldt’s centre-right administration has faced criticism from opposition parties over its hardline approach to Swedish carmakers ahead of next year’s general election.

Volvo, the country’s other global car brand, also faces an uncertain future as Ford tries to offload the business to Geely of China.

Mr Reinfeldt said he was keen to preserve Swedish car manufacturing, but urged governments to face up to industry overcapacity. “Politicians in Europe cannot all say, ‘We must keep our facilities exactly as they are,’” he said.

His comments came as GM prepares to restructure Opel with job cuts threatened in Germany, Belgium and the UK.

Mr Reinfeldt said Saab could be discussed when he travels to Beijing this weekend for a European Union summit with China. But, while he would listen to any Chinese proposals for the group, he was not going on a sales mission, he said.

Beijing Automotive Industry Holding held a minority stake in the Koenigsegg-led consortium and there has been speculation that it could pursue its interest alone.