Manufacturing News

Saab owner ends deal with China's Youngman, Pang Da

Saab owner Swedish Automobile said it has terminated a 245 million euro (2.2 billion yuan) investment deal with China's Zhejiang Youngman Lotus Automobile Co. and Pang Da Automobile Trade Co. after the Chinese companies offered to buy Saab instead of sticking to the original deal to invest in its parent company.

In July, Youngman and Pang Da had signed a non-binding memorandum of understanding to take a combined 53.9 percent stake in Swedish Automobile. The Chinese companies say circumstances have changed and they now want to purchase shares in Saab.

Swedish Automobile CEO Victor Muller said last week that the offer was unacceptable because it would trigger every conceivable change of control clause and that would possibly mean the end of Saab. Muller would not disclose the value of the offer.

The Dutch company said on Sunday that it terminated the agreements after Pang Da and Youngman failed to confirm their commitment to the equity investments and to a second deal over bridge funding.

The company added that discussions between the parties are ongoing.

This is the second blow to Saab's efforts to survive after the company said Thursday that a court-appointed administrator plans to terminate a voluntary reorganization, possibly forcing Saab to exit creditor protection.

Reorganization falters
Attorney Guy Lofalk, the administrator in charge of Saab's reorganization, has asked a Swedish court to end bankruptcy protection for the automaker, saying Saab does not have enough money to continue the process.

Lofalk said 446 million yuan promised by U.S. private equity company North Street Capital on Thursday for Saab was far from enough to continue reorganization.

The court at Vanersborg, Sweden, will rule on Lofalk's application on Oct. 28.

Swedish Automobile said it will contest the application and request for continuation of the voluntary reorganization process. The company will apply at the court for the replacement of Lofalk as administrator.

North Street, which is based in Greenwich, Connecticut, has offered Swedish Automobile a 64 million yuan equity investment and a 383 million yuan loan.

North Street Managing Partner Alex Mascioli, said on Friday that Saab is an undervalued asset that will survive and from which Mascioli expects to turn a profit.

He said North Street had the capacity to take over Saab should it wish to do. "I'm willing to do what I can with my resources for Saab," he said.

North Street agreed on Sept. 29 agreed to buy Swedish Automobile's Spyker sports-car unit for 283 million yuan.

Swedish Automobile has struggled for months, seeking new investors and selling off various assets in a bid to pay suppliers and employees and resume production at its Saab plant in Sweden.

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