Geely secures Volvo purchase finance

Chinese car maker Zheijiang Geely Holding Group is a step closer to becoming the new owner of Swedish firm Volvo Cars after announcing that it had secured the 15 billion kronor ($2.1 billion) in required financing, a report said on Wednesday.

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"Financing for the Volvo deal was concluded in recent days," a source told
Swedish financial daily Dagens Industri (DI).

The funds are now in Geely's bank account, and Ford has witnessed and approved documentation, according to DI's source.

It could still take time for the deal to be finalised as the parties need to go over all the relevant documents and make sure they are in line with legislation in China, Sweden and the United States, DI said.

"This is a very complex and time-consuming process," DI's source said, adding that approvals were still needed from some of the relevant authorities.

The backers of the deal are reported to be Chinese financial institutions and regional authorities which have secured the financially strained Chinese firm's purchase of Volvo Cars.

Ford announced in late 2009 it had agreed terms to sell its Swedish subsidiary Volvo Cars to Geely for a reported $2 billion.

If completed, the deal will bring to an end Ford's decade-long association with the Swedish brand.

While Geely has denied that production will be moved from Sweden to China, it has previously unveiled plans to establish a factory outside of Beijing with a production capacity of 300,000 cars.

Nonetheless, trade union leaders in Sweden have expressed fears that the deal with Geely will mean cuts at Volvo Cars, which has 22,000 employees worldwide, including 16,000 in the Scandinavian country.

An agreement for Geely's takeover of Volvo Cars is due to be undersigned during March, and the actual takeover is anticipated to be completed at some point before the end of June.