STOCKHOLM (Reuters) - China’s Pang Da Automobile Trade Co (601258.SS) and Zhejiang Youngman Lotus Automobile Co agreed to buy struggling carmaker Saab for 100 million euros ($141.4 million), launching a new rescue plan for the troubled Swedish group after months of twists and turns.
The news came after a source with knowledge of the matter earlier told Reuters a deal was close. [ID:nB9E7LA00G]
In a reminder that other deals and promises of funding for Saab have fallen through, owner Swedish Automobile SWAN.AS said on Friday the new agreement was valid to November 15 and that final terms were still being worked on, including long-term financing.
Swedish Automobile, whose shares leapt 28 percent after the news but are still down 70 percent this year, just last week rejected a full takeover of the carmaker by the two Chinese firms, but had continued negotiations.
The 60-year-old company has not produced cars for months as it has lurched from one cash crisis to another. It is under court protection from creditors, a process which had been in danger of collapsing before the new Chinese announcement.
Swedish Automobile said the two Chinese firms were to pay 100 million euros under a memorandum of understanding.
“Final agreement between the parties is subject to a definitive share purchase agreement between Swan, Pang Da and Youngman, which will contain certain conditions including the approval of the relevant authorities, Swan’s shareholders and certain other parties,” it said.
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.
“The consideration of 100 million euros will be paid in installments. An important consideration for Swan to enter into the transaction is the commitment of Pang Da and Youngman to provide long term funding to Saab Automobile,” Swedish Automoblie added.
The Chinese firms had earlier vowed to invest 245 million euros in Saab, with Youngman pledging 70 million in bridge financing. Only a small amount of the 70 million was paid.
The prospect of a new Chinese deal persuaded court-appointed administrator Guy Lofalk to withdraw a request to terminate a creditor protection scheme, which the court had been due to rule on Friday. A decision against Saab could have led to a flood of bankruptcy petitions. ($1 = 0.707 Euros)
Editing by David Holmes