Spyker signs deal with China's Hawtai Motor to raise funds for Saab

Saab owner Spyker Cars on Tuesday said it has signed an agreement with China's Hawtai Motor Group to form joint ventures for manufacturing, technology and distribution. The agreement will also provide $222 million (150 million euros) funding for Saab, which has been forced to halt production because it cannot pay suppliers' bills.

Victor Muller, Spyker CEO and Saab chairman, said the partnership will allow Saab to enter the Chinese car market with a strong Chinese manufacturer.

"We expect that Saab's unique brand values, based on its aviation heritage, Scandinavian origins and innovation-driven character will do very well in the Chinese market," Muller said in a statement.

Hawtai will invest $177.7 million for a maximum of a 29.9 percent equity stake in Spyker. The remaining $44.4 million will be in the form of a convertible loan with a six-month maturity, an interest rate of 7 percent a year and a conversion price of $7.23 per share.

Richard Zhang, vice president of Hawtai, said: "This is a great day for our relatively young company, which was founded 10 years ago. The partnership with the iconic Saab brand will give us access to innovative technologies and an international network, which would have taken us decades to build."

Hawtai is a small, private SUV and bus maker established in 2000 in the eastern China city of Rongcheng. In 2002, it started building the Terracan and Santa Fe SUVs under its own brand, using technology licensed from Hyundai.

In 2010, Hawtai sold 81,439 units of the two SUV models, according to J. D. Power. The company started selling its own brand sedan last year.

The company has its headquarters and R&D center in Beijing, and production factories in Ordos, Inner Mongolia, and Rongcheng, Shandong Province. Hawtai has an annual production capacity of 350,000 vehicles, 300,000 clean diesel engines and 450,000 automatic transmissions

It aims to become a global leading automotive company by 2015 after raising capacity to 1 million vehicles, 1 million engines and 1 million automatic transmissions.

Muller said: "With Hawtai's clean-diesel engine technologies and production capacity, and its ambitious development programs, we have found the right partner to develop the Saab business and build a solid relationship."

On Monday, Spyker said it aims to restart Saab production within a week after it secured nearly $88.9 million (60 million euros) in short-term funding.

Spyker said it had obtained a $44.4 million convertible loan from investment fund Gemini, one of Spyker's shareholders, which Muller said is owned by a Lithuanian businessman, and will also make a drawdown request to the European Investment Bank for $43.1 million.

Russian businessman Vladimir Antonov has also agreed to a buy Saab's real estate and plant and lease it back in return for a 30 percent stake, but the deal has been held up, after the European Investment Bank imposed terms with which Saab did not agree.

By Paul McVeigh- Automotive News Europe