Red Noland Collision Center

China's Youngman comes up with vital cash for Saab

2011-10-14

STOCKHOLM/AMSTERDAM -- Chinese carmaker Zhejiang Youngman Lotus Automobile Co. gave ailing Saab a new injection of cash, Saab said in a statement, keeping alive the Swedish company's hopes of survival. The money is part of a 70 million euros ($97 million) loan planned by Youngman that is intended to see Saab through a period of creditor protection until Chinese authorities approve a bigger investment by Youngman and China's Pang Da. That approval could come in weeks, Saab said. We are putting bridge financing in place so we can fund business during the reorganization -- so we don't incur new debt, said Saab spokeswoman Gunilla Gustavs. We have running costs, such as electricity, that we need to take care of. There are a number of business-critical operations that need to be funded, she added. Saab hopes the Chinese investment will give it a long-term future, though analysts have noted the company's small size in what is a competitive market. Chinese investment has already saved one Swedish carmaker when Geely bought Volvo in 2010. Saab did not say how much money had been paid by Youngman in the statement on Thursday, but Swedish newspaper Dagens Industri reported on Wednesday that Saab had received about 100 million crowns ($15 million). More payments will be made this week. Gustavs would not say why the Youngman cash was being paid in chunks but said the full amount should arrive by Oct. 22. She said some of the Youngman cash would likely be used to pay October salaries. A state guarantee on wages that started during the company's reorganization is due to expire on October 21, just days before October wages are due. Saab has struggled for months to stave off collapse, seeking new investors and selling off assets to pay suppliers and employees and resume production at its plant in Sweden. In June, Saab's owner signed a non-binding memorandum of understanding for Youngman to take a 29.9 percent stake in the company and for Pang Da to take a 24 percent stake, for a combined 245 million euros. Saab expects Youngman and Pang Da Automobile Trade Co. Ltd. to receive Chinese approval for the planned long-term investment during the next weeks, it said in a statement. Still, gaining Chinese government clearance could be difficult because Beijing follows a strict, price-sensitive policy when it comes to overseas acquisitions. Failure to gain Beijing's approval on time ended a deal Saab entered into with Chinese company Hawtai Motor Group in May, while Sichuan Tengzhong Heavy Industrial Machinery's bid to buy GM's Hummer in 2010 also fell through. Source: Reuters Read more: http://www.autonews.com/apps/pbcs.dll/article?AID=/20111013/ANE/111019936/1496#ixzz1afnlbF2K