Chinese to the rescue as Saab owner clinches €100m deal

STRUGLGING Saab is set to become the second Swedish car maker to be acquired by the Chinese after a €100 million (£88m) deal was reached with Zhejiang Youngman Lotus Automobile Co and Pang Da Automobile Trade Co.

Saab has not produced cars for months and has lurched from one cash crisis to another to find itself under court protection from creditors to stop bankruptcy filings, a situation that was in danger of collapsing before the new Chinese agreement.

“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,” said Victor Muller, chief executive of current Saab owner Swedish Automobile.

He spoke after Swedish Automobile announced a memorandum of understanding under which car maker Youngman and dealer Pang Da will acquire the firm.

It comes just over a year after Chinese group Geely bought Volvo from Ford. Swedish Automobile, then called Spyker, itself rescued Saab from closure by former owner General Motors in early 2010.

Muller has orchestrated a string of deals over the past few months to keep Saab afloat after it had to close its production line. Swedish Automobile said the new agreement was valid to 15 November and that final terms were still being worked on, including long-term financing.

Muller, 52, a former mergers and acquisitions lawyer who made his fortune from Dutch fashion brand McGregor before revamping loss-making luxury sports car maker Spyker, is a fanatical collector of classic cars. His passion has cost him dearly in this case. He told a conference call that Swedish Automobile, in which he is the biggest shareholder, would lose roughly €70m from its Saab investment if the latest deal went ahead, having paid about €54m for Saab and later investing a further €120m.

Muller, who has spent much of this year travelling the world, tapping a network of friends and potential investors, said he was confident in the future of the 60-year-old brand. “I have had no life in the past two years. My job was to save the company. I think I achieved it,” he said.

“We can be comfortable that the business plan that the company had made will now be executed and that the funding will be provided,” he added.

Muller said he would catch up on his sleep once the deal was secured. “First, I’m going to sleep a lot. No Saab, but sleep.”

Swedish Automobile’s shares leapt 28 per cent after the news but are still down 70 per cent this year. Just last week it rejected a full takeover of the car maker by the two Chinese firms, but had continued negotiations.Muller said the two Chinese firms planned to resume production in Sweden as well as start production in China.

Any new equity deal from the two Chinese investors would require approval from the Chinese government and the outcome could be far from certain because Beijing follows a strict and price-sensitive policy when it comes to overseas acquisitions.

The European Investment Bank and General Motors also, as creditors to Saab, have to give their approval to an agreement. Muller said he had only had a brief talk with GM about the new Chinese deal. “If we play our cards right, I think that they will be convinced that this is of benefit to all parties, including themselves,” he said of creditors.

The prospect of a new Chinese deal persuaded court- appointed administrator Guy Lofalk to withdraw a request to terminate a creditor protection scheme. A decision against Saab could have led to a flood of bankruptcy petitions. A meeting with creditors is due on Monday.