Swedish automaker Saab has been on the ropes for years, but the firm may have been saved by two Chinese auto firms. A last minute agreement by Zhejiang Youngman Lotus and Pang Da to purchase Saab appears to have saved it from liquidation.
Possible end to Saab story
Earlier this year, it was announced that Saab, the Swedish automaker that has been embroiled in financial turmoil for years, had lined up a pair of Chinese auto firms willing to save Saab’s skin. The two Chinese auto firms, Zhejiang Youngman Lotus Automobile and Pang Da Automotive Group, were willing to pay more than $100 million to buy Saab from Swedish Automotive and rescue the floundering firm. However, the deal has been held up since Saab filed for bankruptcy protection so it could undergo a voluntary reorganization.
Saab, according to the New York Times, was able to broker an agreement with Zhejiang Youngman and Pang Da at the absolute last second. Saab was literally a few hours from being forced into liquidation by the Swedish courts when it was announced that two prospective Chinese buyers had agreed to buy Saab for more than $100 million.
Stay of execution
According to Reuters, Swedish Automotive has until Nov. 15 to finalize the deal with Zhejiang Youngman and Pang Da, as the Saab buyout is technically only an agreement in principle to buy it, not a receipt. Saab’s prospective new owners not only have to approve of the company before cutting checks, they also have to receive the approval of the Chinese Commerce Ministry, according to the New York Times. Saab’s creditors, according to the Wall Street Journal, also have to approve of the deal.
Zhejiang Youngman will purchase 60 percent and Pang Da will purchase 40 percent of Saab. The two companies will pay a combined 100 million euros (about $140 million) to buy Saab from Swedish Automotive. According to AutoWeek, Swedish Automotive CEO Victor Muller said the total investment will be around 500 million euros. Swedish Automotive is expected to take a $74 million loss in the end.
According to MotorTrend, the Saab’s factory in Trollhatten has been dormant since June, after shutting down production in April and a limited resumption of production in May. The company has already sold the title to its Trollhatten factory and its real estate holdings for almost $40 million. It is believed that Saab will need far more capital in order to return to fiscal health, and Swedish CEO Victor Muller, according to Reuters, doubts that production will resume this year. Muller, according to AutoWeek, is expected to remain CEO of Saab until a replacement is found.