Unions hold off bankruptcy action against Saab

September 12, 2011 - 6:50 AM

STOCKHOLM (AP) — Unions said Monday they will hold off bankruptcy action against Saab Automobile until an appeals court has reviewed the cash-strapped car maker's request for bankruptcy protection.

Saab intensified talks with Chinese investors over the weekend, hoping to acquire approval for a reconstruction from an appeals court, according to metal workers union IF Metall.

"We assume the appeals court will carefully consider and assess the statements that both Pang Da and Youngman have made that their interest and great investments in Saab are very serious," IF Metall chairman Stefan Lofven and the union's leader at the Saab plant, Hakan Skott, said in a joint statement.

The Swedish Association of Graduate Engineers said it too would hold off bankruptcy action.

Production at Saab's manufacturing plant in Trollhattan, southwestern Sweden, has been suspended for most of the year while the company has struggled to pay suppliers and staff.

Saab spokesman Eric Geers said the company will file its appeal Monday against last week's district court ruling that rejected its application for bankruptcy protection on grounds that it was unclear how the company would find the money it needs to stay afloat.

The company is hoping for a $344 million (euro245 million) cash injection from Chinese investors Zhejiang Youngman Lotus Automobile Co. and Pang Da Automobile Trade Co., that is awaiting regulatory approval.

In the meantime, it has signed a complex bridge financing agreement with Youngman, whereby Saab will receive euro70 million upfront payment from the Chinese company in return for a technology license, Saab said Monday.

The deal is subject to approval by a lender and Saab said it plans to repay the money once the original, $344 million agreement is approved by Chinese authorities.

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Malin Rising can be reached at http://twitter.com/malinrising