China's Pang Da, Youngman agree to buy Saab

Chinese firms Pang Da Automobile Trade Co. and Zhejiang Youngman Lotus Automobile Co. have agreed to buy Saab for $142 million (100 million euros).

Saab owner, Swedish Automobile, said on Friday that it has entered into a memorandum of understanding to sell 100 percent of the shares of Saab to the Chinese companies.

Swedish Automobile said an important part of the deal "is the commitment of Pang Da and Youngman to provide long-term funding to Saab Automobile."

The memorandum of understanding is valid until Nov. 15, provided Saab stays in reorganization. Swedish Automobile said Saab's administrator, Guy Lofalk, has withdrawn his application to a Swedish court for Saab to exit reorganization.

Pang Da and Youngman will provide sufficient financing so that a court-backed reconstruction process under creditor protection can continue, a court document showed. The court had been due later on Friday to decide on Lofalk's application.

Swedish Automobile Chairman Victor Muller said the deal has "secured the future of Saab." He told Sweden's Sverige Radio that Saab would now be able to pay its creditors, restart production, launch new models and expand in China.

Muller said the Chinese companies are committed to investing $707 million (500 million euros) in Saab. He told the radio station that he will stay on as Saab CEO until a new CEO is found and he will remain involved in Saab in the future.

Final agreement is subject to a definitive share purchase agreement between Swedish Automobile, Pang Da and Youngman, which will contain certain conditions including the approval of the relevant authorities, Swedish Automobile's shareholders and certain other parties, Swedish Automobile said a statement.

The $142 million will be paid in installments.

Saab came under court protection from creditors and bankruptcy claims in September, the second time in about two years, owing hundreds of millions to workers and suppliers.

An initial rescue plan was offered by Youngman and Pang Da, each of which had agreed to take a combined 53.9 percent stake in Swedish Automobile for a total of $340 million.

In agreeing to sell Saab, Swedish Automobile has changed its position from Oct. 23 when it rejected an offer from the Chinese companies for an outright buyout of Saab.

Without fresh investment, Saab could lose its court protection from bankruptcy claims, paving the way for the automaker to be declared bankrupt.

By Automotive News Europe