Troubled Swedish carmaker Saab said Monday it had hammered out the details of a deal to obtain last-ditch rescue funding from Chinese distributor Pang Da Automobile and that a second Chinese company had agreed to join their joint venture.
Saab, Pang Da, and Zhejiang Youngman Lotus Automobile “signed a non-binding memorandum of understanding (MOU, including) an equity participation in the total aggregate amount of about €245 million ($352 million), as well as a strategic alliance,” Saab’s Dutch owner Spyker said in a statement.
“This is a big deal for Saab. This is a €245 million investment we’re talking about… It is a great sign of confidence in Saab’s future, the value of our brand, especially on the Chinese market,” Saab spokeswoman Gunilla Gustavs told AFP.
The good news is welcome at Saab, which was forced last week to halt production at its main plant in Trollhaettan in southwestern Sweden due to a lack of components, just two weeks after it resumed making cars following a seven-week hiatus.
Production will stay shut down at least until the end of this week, and it remained unclear Monday when it would resume, Gustavs said.
Monday’s announcement came nearly a month after Saab first said it had reached a distribution deal with Pang Da after a deal with Chinese carmaker Hawtai fell through.
Under that deal, Pang Da agreed to buy up to €45 million worth of Saabs for redistribution in China, and to buy a 24-percent stake in Spyker.
On Monday, Spyker said Youngman had also now agreed to go in as a 29.9-percent owner, investing €136 million, or €4.19 a share.
The news sent Spyker’s share price soaring more than 25 percent to €3.19 a share in late morning trading on the Amsterdam stock exchange.
In May, Spyker and Pang Da had also spoken vaguely of a 50-50 distribution joint venture and a manufacturing joint venture that would include a third party.
Monday’s announcement fleshed out the details of the deal, saying Youngman and Saab each would hold 45 percent of the manufacturing joint venture, while Pang Da would hold a 10 percent share.
For the distribution joint venture, Youngman and Saab would each hold 33 percent, while Pang Da would hold 34 percent, the Spyker statement said.
“For the manufacturing joint venture, we really need a partner that is good at manufacturing. Youngman is in that respect an excellent partner,” Gustavs explained, adding that the deal still needed regulatory approval from a number of different authorities.
Saab and Spyker chief executive Victor Muller hailed the deal, saying “we are convinced that Youngman represents all the qualities required to make Saab and the joint ventures a success.”
Saab, which employs 3,800 people, was rescued at the last minute in early 2010 when tiny Dutch company Spyker bought it for $400 million from US auto giant General Motors.
Spyker originally made luxury sports cars but said in February it was selling that division to concentrate on Saab, and last week it announced it would change its name to Swedish Automobile.
After initial optimistic statements and production forecasts, Spyker and Saab have recently been scrambling to pull together enough cash to keep production going.
Muller on Monday insisted the latest agreement was “a step that significantly strengthens Saab’s financial position and would secure the mid and long term financing of Saab Automobile.”