Saab signs deal with second China partner

Saab has agreed to China's Zhejiang Youngman Lotus Automobile Co. taking an equity stake in the company as part of a distribution and manufacturing joint venture.

Saab and its owner Spyker Cars NV signed a deal with Chinese car distributor Pang Da in May worth up to 110 million euros that involved setting up a joint venture with Spyker and a partner in China to start making Saabs in China within two years.

Spyker said Monday it had now signed a memorandum of understanding involving Youngman buying an equity stake in Spyker for 136 million euros ($195 million) and entering the distribution and manufacturing joint venture in China.

Under the deal, Youngman will take a 45 percent stake in the manufacturing joint venture in China, Saab 45 percent and Pang Da 10 percent. Youngman will also take a 33 percent stake in the distribution joint venture, with Pang Da holding 34 percent and Saab 33 percent.

Youngman will pay 136 million euros at 4.19 euros per share to take a 29.9 percent stake in Spyker on a fully diluted basis. Pang Da will hold a 24 percent stake in Spyker and will invest a total of 109 million euros in the firm.

"Having entered the MOU on May 16 with Pang Da, we collectively immediately set out to identify the most suitable (manufacturing) partner to join Saab and our joint ventures. We are convinced that Youngman represents all the qualities required to make Saab and the joint ventures a success,'' Victor Muller, CEO of Spyker and Saab said Monday.

The deal is subject to approval from certain Chinese governmental agencies and third parties, an issue which has halted previously agreed investments from Chinese companies.

Saab has been chasing several deals to resolve a cash crunch that halted production for seven weeks earlier this year, and despite the deal announced with Pang Da in May and a resulting 30 million euro payment, production was halted again last week.

The company has said it will keep production lines halted this week as it looks to secure an agreement with remaining suppliers and as it as it negotiates more funds.

By David Jolley- Automotive News