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Cats, it’s said, have nine lives. One can easily wonder if the same is true for Saab and parent company Spyker, whose CEO continues to put together last-minute deals to save the struggling Swedish automaker.
After last week’s contract with Hawtai Motor Group fell through, the future looked bleak for Saab, which is deep in debt and unable to restart manufacturing without additional cash. Spyker CEO Victor Muller, however, had another ace up his sleeve: Muller had been negotiating with other Chinese entities, not just Hawtai.
Today, Spyker announced a new deal to save Saab, this one with China’s Pangda Automobile Trade Company. If approved by the Swedish Debt Office, the European Investment Bank and Chinese authorities, the deal will net Spyker an immediate cash infusion of $42.5 million, in the form of purchase orders for Saab vehicles to be sold in China. A second order, worth $21.25 million, will follow.
Longer term, Pangda is seeking to purchase a 24-percent share of Spyker for an estimated $92.3 million. The equity stake will pave the way towards Chinese manufacturing of Saab vehicles, as well as a new line of automobiles to be produced jointly between Saab, Pangda and a third partner, as yet unnamed.
While the proposed deal still faces regulatory approval, Spyker’s Muller is optimistic that it won’t get mired in the same bureaucratic red tape as the deal with Hawtai. Hawtai was a manufacturer, and the Chinese government is seeking to consolidate their automotive industries; in other words, they want fewer automotive brands in the market, not more. Pangda, on the other hand, is a distributor, and is cash-rich from a $1 billion initial public offering held last month.
The Chinese government must still approve any investment in foreign companies, but the deal is being presented as one between a foreign manufacturer and their Chinese distributor. It’s still uncertain if all the required parties will green-light the transaction, but it’s probably the surest bet that Spyker has delivered to date.