Saab agrees on Youngman stake, China JV

The Saab corporate logo is seen on the hood of a Saab car. Saab has agreed for China Youngman Automotive to take an equity stake in the company. ? Reuters pic

STOCKHOLM, June 13 ? Saab Automobile has agreed for China Youngman Automotive to take an equity stake in the company as part of a distribution and manufacturing joint venture in China aimed at rescuing the ailing Swedish carmaker.

Saab owner Spyker signed a deal with Chinese car distributor Pangda in May worth up to ?110 million (RM480.07 million) that involved setting up a joint venture with Spyker and a partner in China to start making Saabs in China within two years.

The Swedish car maker said today it had now signed a memorandum of understanding involving Youngman buying an equity stake in Saab for ?136 million and entering the distribution and manufacturing joint venture in China.

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

Beijing follows a strict and price-sensitive policy when it comes to outbound acquisitions which means gaining Chinese clearance could still prove difficult.

Failure to secure approval scuttled Sichuan Tengzhong Heavy Industrial Machinery?s bid for GM?s Hummer in 2010.

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 Pangda in May and a resulting ?30 million 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 negotiates more funds.

Under today?s deal, Youngman will take a 45 per cent stake in the manufacturing joint venture in China, Saab 45 per cent and Pangda 10 per cent. Youngman will also take a 33 per cent stake in the distribution joint venture, with Pangda holding 34 per cent and Saab 33 per cent.

Youngman will pay ?136 million at ?4.19 per share to take a 29.9 per cent stake in Spyker on a fully diluted basis, Saab said in a statement. Pangda will hold a 24 per cent stake in Spyker and will invest a total of ?109 million in the firm.

Shares in Dutch-listed Spyker Cars jumped 22 per cent.

A Swedish paper had earlier reported that Saab will close a deal to sell its factory buildings this week, providing the firm with about with about 280 million Swedish crowns (RM133.91 million) in cash.

?All pieces of the puzzle are not yet in place, but it looks good and the atmosphere is positive,? newspaper Dagens Industri quoted a source as saying today.

Saab declined to comment on the timing of a real estate sale, in which it plans to then lease the buildings back, but said it was working hard to bolster its finances and reach agreements with suppliers to restart production soon.

?We have 10,000 orders waiting,? Saab spokeswoman Gunilla Gustavs said. ? Reuters

Source: http://feedproxy.google.com/~r/tmi/news/allnews/~3/o_VR0xCNAoQ/story01.htm

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