GM board meets on Saab as threat of closure looms

Saab Automobile faced the threat of closure as the board of U.S. parent General Motors met on Tuesday to hammer out plans after a deal collapsed to sell the Swedish brand.

Time is running out for Saab after Swedish luxury car maker Koenigsegg pulled out of bid talks last week, putting in doubt the future of the loss-making GM unit. Analysts have said the most likely outcome is a closure.

The reality is that to try to get someone in at this stage just looks not feasible, said an auto analyst who sked not to be named. There is no further quality offer likely to pop up.

Saab and the Swedish government say other investors have approached GM regarding Saab, but in light of the U.S. car maker's vow to drop the brand by early 2010, there is precious little time in which to forge a new deal.

It is clear that they (GM) have to find a solution as quickly as possible, without high costs and without creating a situation of new competition, said Professor Christer Karlsson at Copenhagen Business School.

For instance you can't sell it to anybody who wants to sell Saab on the Chinese market because then it will compete with GM's own products, since the new Buick is more or less the same car as the new Saab.

STILL HOPE

Swedish government officials met with GM this week ahead of the board meeting, which is likely to last all Tuesday, to underline that it is ready to provide loan guarantees to a new owner though it has ruled out taking a stake in Saab.

State secretary Joran Hagglund told Swedish news agency TT after the meeting with GM in Detroit that he remained hopeful that a closure of the 60-year-old brand might be avoided.

Beijing Automotive Industry Holding Corp (BAIC), which tied up with Koeningsegg in October, could still be among the possible contenders to take over Saab, which has not made a profit since 2001.

Merbanco Merchant Banking Co, based in Wyoming, has also said it remains interested in Saab.

U.S. financier Ira Rennert and his Renco Group had also expressed interest in pursuing a deal for Saab before GM struck a preliminary deal with Koenigsegg earlier this year.

($1=.6650 Euro)