ERJ staff report (AN)
Amsterdam, Netherlands (Reuters) -- China's largest listed car distributor has come to the rescue of Saab in a deal worth as much as 110 million euros ($155 million) for the debt-ridden automaker, potentially staving off the collapse of one of Sweden's best-known brands.
Spyker Cars NV, the Dutch owner of Saab, announced a deal with China's Pangda Automobile Trade Co Ltd. today, which it said would secure Saab's medium-term funding needs.
The latest deal involves an agreement by Pangda to buy Saab vehicles in two sections. An initial purchase worth 30 million euros is already in the works and a further sale worth 15 million euros will follow, Victor Muller, CEO of Spyker and Saab, told a conference call with journalists today.
Pangda, which raised raised nearly $1 billion in its initial public offering last month, will also take a 24 percent equity stake in Spyker for a total of 65 million euros, or 4.19 euros per share.
"It still requires a lot of work before this 65 million is in our bank account, to get the permits," Muller said, but "when we have the 65 million euros, it will be enough for the mid-term, or a year."
The deal is the second pact with a Chinese rescuer within as many weeks, and could still face setbacks given the difficulties some Chinese firms have had in the past when it comes to obtaining the requisite government approvals for acquisitions or overseas investments.
However Muller said that it would be much easier to obtain the necessary approvals because Pangda is a car distributor and not a manufacturer.
He added that Pangda, which is in the business of distributing cars, does not need approvals to buy Saab cars for sale in China, paving the way for Saab to immediately receive 30 million euros for vehicle sales.
A deal with another Chinese company, Hawtai Motor Group, fell through last week. Hawtai said on Friday that "commercial and economic realities" and not a lack of regulatory approval had led to the breakdown of the deal.
Spyker shares, initially suspended when the market opened in Amsterdam, surged 18.3 percent to 4.2 euros by 10:44 CET.
China sales growth cools
Amsterdam-listed Spyker bought Saab from General Motors Co. a year ago but has struggled to turn around the company. It has scrambled to find new sources of funding in recent weeks so it can pay its suppliers, after several stopped delivering parts, bringing Saab's assembly line to a standstill for much of April and part of May.
Chinese car firms need to expand their product ranges at a time when sales at home are expected to slow, after the government withdrew policy incentives that helped elevate the country to the world's top auto market in 2009.
In addition Pangda, which handles the Toyota Motor Corp., Honda Motor Co. and Subaru brands, is suffering from the fall-out of Japan's devastating earthquake and tsunami which has disrupted supply chains.
"Both parties are confident that this partnership allows Saab Automobile and Pangda to create a strong business, initially in the distribution and subsequently in the manufacturing of Saab vehicles in China," Muller said in a statement.
"Pangda is a forward-looking, profitable and well-capitalised public company that, as the single largest automobile distributor in China, sees enormous potential for our brand in their home market," he added.
But Spyker warned that some of the transactions require consents from certain Chinese government agencies, the European Investment Bank, GM and the Swedish National Debt Office.
From Automotive News (A Crain publication)