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Saab pulls plug on China funding deal

AFP/The Local · 24 Oct 2011, 12:29

Published: 24 Oct 2011 12:29 GMT+02:00

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The company wrote in a statement that it had "given notice of termination with immediate effect of the subscription agreement of July 2011, entered into by Swan, Pang Da and Youngman."

Swedish Automobile confirmed last week that the two Chinese companies, which in July agreed to inject 245 million euros ($335 million) into Saab in exchange for about half the carmaker, had instead offered to buy the whole company.

Swan said Friday it had rejected that offer and that it instead was trying to confirm the July deal.

Late Sunday, it said it had terminated the deal "in view of the fact that Pang Da and Youngman failed to confirm their commitment to the subscription agreement."

The Dutch firm also lamented that its Chinese partners had failed to honour a deal to provide bridge financing of 70 million euros to Saab while it undergoes a three-month restructuring process that began in September.

According to Swedish daily Svenska Dagbladet, Pang Da and Youngman have meanwhile offered a mere 200 million kronor ($30.4 million) to buy all of Saab.

Swan did not confirm the amount offered, saying only that it was "unacceptable to Swan," but adding that "discussions between the parties are ongoing."

Saab's court-appointed administrator, Guy Lofalk, said after learning the carmaker's financing had fallen through that he no longer thought the reorganisation would be successful and called for the process and the bankruptcy protection to be halted.

The Vänersborg court in southwestern Sweden has until the end of this week

to decide whether to grant his petition.

Story continues below…

If it does, numerous requests for Saab to be declared bankrupt, which have

been put on ice during the reorganisation, will be reactivated.

Saab, which was rescued from the brink of bankruptcy in early 2010 when Swan (then known as Spyker) bought it from US giant General Motors for 400 million dollars.

Since then, however, it has traveled an increasingly rocky road, with production at its Trollhättan factory in southwestern Sweden halted almost continuously since April as suppliers stopped deliveries over mountains of unpaid bills.

Before Saab entered bankruptcy protection last month, many of its some 3,700 employees had seen their salary payments significantly delayed for three straight months.

AFP/The Local (news@thelocal.se)

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Your comments about this article

13:27 October 24, 2011 by RobinHood
Oh dear. A new saviour will no doubt be presented in a few days, and then that too will fall through. And then another, and then another.

Nobody in Sweden wants to see Saab go down, but enough is enough. Saab has been given every chance, but the taxpayers have been picking up Saab's wage bill for long enough. Saab employees, who haven't already done so, need to get on with their lives and find new jobs, or start retraining. Saab's creditors need to rearrange their finances to absorb the huge losses coming their way- if they can. The government needs to prepare itself to pay the huge loans it has guaranteed, but which will never be repaid by Saab.

No one in Sweden, except maybe Viktor, seems to have heard of the demise of Rover. This scandal is just about to break. The press, who should have been ahead of the game on this one, turned a blind eye. Why? A triumph of wishful thinking over the harsh realities that surround a car company that can't sell cars, or even build them.
22:51 October 24, 2011 by McChatter
Why should the Chinese bother offering loans? If they wait long enough Saab will go bankrupt and fall into their lap like a ripe apple. Then they won't even have to pay the $30 million. Muller's beginning to act like Berlusconi. Shame for Saab.
03:23 October 25, 2011 by Shawntooth
pangda injected 58 million euros for pre-order, youngman provided 70 million euros of temporary loan; the initial confidence is severely shaken by the incredible bureaucracy and the possibility of not being able to recover the loss.....there's no reason for chinese to offer more loans unless swan agrees sell off 100% of saab's ownership
10:06 October 25, 2011 by spy

Yes I think the Chinese want a controlling stake in Saab, I would not be surprised if they don't hold out for close to 100%.
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