Swedish Automobile has announced its intention to sell 100% of Saab to China’s Pang Da Automobile Trade Company and Zhejiang Youngman Lotus Automobile Company for 100 million euros.
Youngman and Pang Da had previously offered to acquire a 53.9 percent stake in Swedish Automobile for 245 million euros, and just last Sunday Saab rejected the Chinese companies’ offer of an outright buy out.
According to Swedish Automobile, the current memorandum of understanding between it and the Chinese firms hinges on “the commitment of Pang Da and Youngman to provide long-term funding to Saab Automobile.” The memorandum of understanding will expire on November 15, and requires that Saab remain in reorganization. Saab administrator, Guy Lofalk, has reportedly withdrawn an application that was previously filed with the Swedish court, requesting that the company be allowed to exit reorganization.
Under the agreement, Youngman and Pang Da would be required to provide the much needed funding to allow Saab to proceed with its court-backed restructuring.
In an interview with Sweden’s Sverige Radio, Swedish Automobile chairman Victor Muller said the agreement has “secured the future of Saab” and will allow the automaker to pay its debts, resume production, expand its market, and introduce new models.
He said Youngman and Pang Da are committed to investing 500 million euros and that he will stay on as Saab’s CEO until a replacement is found. Although he did not offer specifics, he also said that he will remain involved in the company in the future.
The statement said that the derivative share purchase agreement will need to be approved by a number of parties, including Swedish Automobile’s shareholders and General Motors Company which is a creditor and also supplies parts to the company.
Muller said he has not had a detailed discussion with GM concerning the proposed deal and added, “It is way too early to make a statement about whether this is going to be easy or not.”
The 100 million euro stock buy out will reportedly be paid for in installments, instead of a lump sum payment.
Last month, Saab came under court protection from claims made by workers and creditors for the second time in the last two years. Without a significant and immediate infusion of cash, Saab runs the risk of losing the court’s protection and being declared bankrupt.
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