Swedish Automobile said to be close to Saab deal with Pang Da, Youngman

11 years, 3 months ago - 28 October 2011
Swedish Automobile said to be close to Saab deal with Pang Da, Youngman
Court could withdraw vital creditor protection from automaker on Friday

Saab's owner Swedish Automobile NV is close to reaching a deal with China's Pang Da Automobile Trade Co. and Zhejiang Youngman Lotus Automobile Co. for a possible takeover of the struggling Swedish automaker, a source with knowledge of the matter said.

The comments mark the latest twist in a long campaign to keep Saab afloat and come on the same day that a court could decide to remove the automaker's bankruptcy protection.

An offer could breathe new life into the 60-year-old Swedish marque, which has moved from crisis to crisis this year and has not produced a car for months.

"The Chinese side and Swedish Auto have been discussing a new equity deal in the past weeks and are close to reaching an agreement now," the source told Reuters on Friday.

The new deal may give the Chinese companies control of the troubled Swedish carmaker, the source added, but declined to provide financial details.

Pang Da and Zhejiang Youngman executives could not be reached immediately for comment. Saab said it couldn't comment on the negotiations.

'There are rumors out this morning that say the deal is signed and so forth, but that is nothing that we can comment on yet,'' Saab spokeswoman, Gunilla Gustavs, told Automotive News Europe on Friday.

On Thursday, Swedish Automobile said it was in "intense final negotiations" with relevant investors on how to secure financing that could keep Saab afloat, a document received by a Swedish court showed. The Dutch company is fighting to keep the court's protection, to allow Saab to reorganize itself under an administrator and avoid being dragged into bankruptcy.

''We do not want to exit reorganization yet, we think it's important to have that continue,'' Gustavs told ANE.

Saab came under court protection from creditors and bankruptcy claims in September, the second time in about two years, owing hundreds of millions of crowns to workers and suppliers.

An initial rescue plan was offered by Zhejiang Youngman and Pang Da, each of which had agreed to take a combined 53.9 percent stake in Swedish Automobile for a total of 245 million euros ($340 million).

However, Swedish Automobile said late on Sunday that it was canceling the provisional pact signed in June and rejected an alternative offer from the Chinese for an outright buyout.

Without fresh investment, a court-appointed administrator could move to lift Saab's protection from bankruptcy claims, paving the way to declaring the automaker bankrupt as early as Friday.


Government approval

Any new equity deal from the two Chinese investors would require approval from the Chinese government and the outcome could be far from certain because Beijing follows a strict and price-sensitive policy when it comes to overseas acquisitions.

Failure to gain Beijing's approval on time torpedoed a deal Saab had with another Chinese company, Hawtai Motor Group, in May. A separate deal for Sichuan Tengzhong Heavy Industrial Machinery's bid to buy General Motors Co.'s Hummer in 2010 also fell through because it did not win government support.

Pang Da chairman Pang Qinghua told Reuters earlier in the month that he had been in contact with the government and received positive feedback about its initial plan.

The Chinese side is expected to submit a formal application on the Saab deal to the government after finalizing the new equity deal, another source said. No time frame was offered.

Geely group, which bought Volvo in 2010, denied reports last month that it was interested in Saab.

BAIC Group, another Chinese automaker, which owns some rights to Saab's old platforms, had no intention of becoming involved in the restructuring of the 60 year-old Swedish brand, Chairman Xu Heyi said earlier in the month.