Swedish premier defends decision to hold off on loans to Saab

Jun 1, 2009, 14:01 GMT

Stockholm - The Swedish government Monday defended its decision to hold off on offering state loan guarantees to troubled Swedish carmaker Saab Automobile as Saab's US owner General Motors declared bankruptcy.

As the size of GM's debt load was revealed in the US, Prime Minister Fredrik Reinfeldt said it was 'fortunate' that Swedish government funds had not been put into the GM 'bankruptcy estate.'

The government has repeatedly rejected calls by among others the opposition Social Democrats and unions to offer loan guarantees.

Reinfeldt and Finance Minister Anders Borg told reporters that the government's view was that it was necessary to get a clear picture of Saab's new owner before putting taxpayer's money at risk.

'We have stated clear and simple terms for the loan guarantees,' Borg said, noting that these included that the money would not be used to pay dividends and jobs would remain in Sweden.

Saab last week was granted an extension until August 20 of its current bankruptcy protection as it attempts to reorganize its business. The brand filed for bankruptcy protection in February when GM declared its intention to shed Saab as part of its own restructuring efforts.

Meanwhile, Saab on Monday said it was confident it could continue its efforts to find a new owner, Swedish media reported.

Saab recently shed 700 employees from its workforce of about 4,000 in Sweden. Most work at its Trollhattan plant.

GM's interest in Saab - one of Europe's smallest car makers - dates back to the early 1990s. The company took full control in 2000.