China's Pang Da, Youngman vow long-term financing for Saab
Rescue includes bridge loans, $854 million in long-term financing
STOCKHOLM -- Pang Da Automobile Trade Co. and Zhejiang Youngman Lotus Automobile Co., the two Chinese companies who agreed to buy Saab for 100 million euros ($142 million) last week, plan to provide a 50 million euro bridge loan and 610 million euros in long-term financing from 2012, court documents showed today.
The plans were outlined in documents submitted to a Swedish court, which ruled today after a meeting with creditors that Saab's reconstruction could continue, although about 15 percent of the 3,400-strong workforce will eventually have to go.
"Pang Da and Youngman are not looking for quick returns as a purely financial investor would be," Lofalk said in the document. "Their investment in Saab is driven by a business interest and a long-term strategy."
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 two Chinese companies.
Swedish Automobile said an important part of the deal is the commitment of the two investors to provide long-term funding to Saab.
The memorandum of understanding is valid until Nov. 15, provided Saab stays in reorganization under a court-appointed process.
A final agreement on the deal 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 on Friday.
Saab came under court protection from creditors and bankruptcy claims in September, the second time in about two years, owing hundreds of millions of crowns 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 245 million euros ($340 million).
In agreeing to sell Saab, Swedish Automobile has changed its position from last week when it rejected an offer from the Chinese companies for an outright buyout of Saab.
Youngman and Pang Da, which plan to keep production in Sweden, but also want to build Saab cars in China, hope to sell up to 55,000 units in 2012 and have targeted a volume of up to 205,000 units per year longer term.
Saab sold almost 32,000 cars in 2010 before running into cash flow problems earlier this year, when production lines ground to a halt after unpaid suppliers stopped delivering parts.
The two Chinese companies expect Saab to turn a profit and produce positive cash flow in 2014, the document added.
At the creditor meeting on Monday, suppliers and unions had been seeking assurances that bills and salaries would be paid.
"The plan, if it becomes reality, looks really very good," Darko Davidovic, a lawyer for Saab's blue-collar union IF Metall, told Reuters after the creditor meeting approved a continued reconstruction process.
Suppliers are owed more than 150 million euros, which Saab's administrator said the new owners aimed to honour in full.
Some 500 jobs will have to go, however, as the companies plan to implement 1 billion Swedish crowns ($157 million) in cost cuts. Saab employs some 3,400 people at its ultra-modern plant in Trollhattan in western Sweden.
Swedish Automobile said in a statement the long-term margin and profitability targets were in line with other near-premium car manufacturers and the plans would help "restore confidence and trust with all key stakeholders".
Sources: Reuters; David Jolley contributed to this report.Contact Automotive News