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‘TCM’ for ailing Saab

By SYF77 on 26 May 2011

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The ailing Saab managed to receive some ‘Traditional Chinese Medication’ as CEO of parent company, Spyker, managed to put together last minute deals to save the struggling Swedish automaker. After the 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, is not ready to give up and had been negotiating with other Chinese entities ever since.

Muller’s effect has not been in vain. On 16 May 11, Spyker announced a new deal 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 US$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. In the longer term, Pangda is seeking to purchase 24% 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 yet-to-be-named third partner.

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 is a manufacturer, and the Chinese government is seeking to consolidate their automotive industries. This means that they want fewer automotive brands in the market and 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.

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SYF77
Written by SYF77
I have been a car fanatic since 1989, when my father was changing our family car then to a Toyota Corolla 1.6 GL fitted with a Twin Cam 16 valve engine that was carburetor-fed, a big deal back in those days. The automobile technology and industry fascinates me and I hope to broadcast these interesting developments to everyone out there through this blog.



 
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