Beleaguered Saab appears to once again have narrowly avoided bankruptcy, announcing Friday that two Chinese companies will buy it for €100 million ($142 million), making it the second Swedish carmaker after Volvo to take the road to China.
“After the better part of seven months of agony for the company we have come to a point where we can proudly say that we made it,” Saab’s chief executive Victor Muller, who has been scrambling for months to secure enough funding to keep the company afloat, told a conference call from Amsterdam.
His comments came after Saab’s Dutch parent company Swedish Automobile (Swan), also headed by Muller, announced Chinese companies Youngman and Pang Da had agreed to buy the struggling carmaker for €100 million.
The deal, which still requires approval from a long line of interested parties, follows numerous other funding attempts to keep Saab going, including an agreement in July with the same two Chinese companies that earlier this week appeared to have fallen through.
Pang Da and Youngman had agreed to inject €245 million into the company in a deal including joint ventures and about half of Saab’s shares; they also agreed to provide €70 million in bridge funding to tide the company over during a three-month restructuring that began in September.
However, late last week, Saab’s court-appointed administrator Guy Lofalk applied for the reorganization to be halted — a move that would effectively have put the company at the mercy of its creditors and likely pushed it quickly into bankruptcy — deeming that the funding deal had collapsed.
Swan also said Sunday it had terminated the deal since its Chinese partners had failed to provide the agreed funds and had instead offered to purchase all of Saab.
But after deeming the initial undisclosed proposal “unacceptable,” Muller said Friday the terms had been dramatically renegotiated and were now favourable, while Lofalk withdrew his petition to abandon the reorganization.
Muller pointed out that Youngman, which will take 60 percent of Saab, and Pang Da, which will take the remaining 40 percent, had agreed to provide long term funding to Saab that was “way in excess of the (€245 million) in the original agreement. It will probably be more like double that amount.”
Muller said the two new owners wanted to continue making cars at Saab’s factory in Trollhättan in southwestern Sweden, brushing aside concerns over moving production to China.
Saab “will follow, I hope, the example set by Geely with Volvo,” he said, referring to the Chinese company that bought Sweden’s other famous car brand in August 2010 for $1.5 billion.
“There was a lot of skepticism about that transaction but I think that everybody has seen by now that that scepticism was unjustified,” he said.
Swedish Prime Minister Fredrik Reinfeldt welcomed the deal, pointing out to public radio that “it is important to do something to secure the jobs we have worried would disappear from Trollhättan.”
Speaking of Youngman and Pang Da, he said they “appear to be strong owners who are working in the world’s fastest-growing car market.”
Suppliers and unions representing Saab’s some 3,700 employees, who are waiting for delayed salary payments for the fourth straight month, also expressed optimism Friday, and several analysts said it was the best and most logical solution to Saab’s woes.
Muller acknowledged that the main obstacle would be getting all the necessary approvals — from the Chinese authorities, the European Investment Bank, the Swedish debt office and Saab’s former owner General Motors.
The latter is expected to be the most difficult to get onboard, due to among other things, concerns over its technology going to China.
Muller nonetheless said he thought all the stamps of approval would be secured within a few weeks and that production, which has been halted basically since April, could start up again about two months later.
Swan, formerly known as Spyker, rescued Saab from the brink of bankruptcy early last year when it bought the company from GM for $400 million.
It has been a rocky road since then and suppliers began halting deliveries in April over mountains of unpaid bills.
Muller cautioned some layoffs would likely be necessary going forward and said his own role in Saab’s future had yet to be determined.