UPDATE 3-Spyker turns to China's Pangda for Saab rescue

Mon May 16, 2011 7:17am EDT

Related Topics

 * Gets 30 mln euros immediately for Saab vehicle purchases
 * Second tranche of 15 mln euros to follow
 * Deal will later provide 65 mln euros in equity funding
 * Deal will secure Saab's medium-term funding
 * Approvals for JV needed from China govt agencies, GM, EIB
 * Spyker shares surge 18 pct
 
 (Adds comments from CEO, analyst, suppliers organisation)
 By Sara Webb
 AMSTERDAM, May 16 (Reuters) - China's largest listed car
distributor has come to the rescue of Saab in a deal worth as
much as 110 million euros, staving off the collapse of one of
Sweden's best-known brands.
 Spyker Cars SPYKR.AS, the Dutch owner of Saab, announced a
deal with China's Pangda Automobile Trade Co Ltd (601258.SS) on
Monday which it said would secure Saab's medium-term funding
needs and allow production to resume within days.
 Saab will immediately receive 30 million euros from Pangda
for vehicles destined for sale in China, allowing it to repay
suppliers and restart production soon, CEO Victor Muller said.
 The firm's Trollhatten plant has been idle for about six
weeks. Parts suppliers ceased deliveries until bills were paid.
 "This is a good first step if it can lead to Saab talking to
its suppliers about paying its bills," said Svenake Berglie,
chief executive of the suppliers organisation, FKG.
 He said it would take about a week to get negotiations done
with suppliers and another week to restart output. Suppliers
estimate Saab owes them "hundreds of millions" of crowns to
suppliers for car parts, electricity and plant maintenance.
 Saab has "a strong product line now but what they need is
long-term financial stability," he added.
 The deal is the second pact with a Chinese rescuer in as
many weeks after a deal with Hawtai Motor Group fell through
last week [ID:nL3E7GD1SA]. It could face some of the same
problems as Chinese firms need government approval for
acquisitions or overseas investments.
 Muller, CEO of Spyker and Saab Automobile, said the fact
Pangda is a distributor, not a manufacturer, meant it would not
need approvals to buy Saab cars for sale in China. Other
transactions will however require consents from certain Chinese
government agencies, the European Investment Bank, GM and the
Swedish National Debt Office.
 Spyker shares, initially suspended when the market opened in
Amsterdam, surged 14.6 percent to 4.07 euros by 1113 GMT.
 
 SCRAMBLE FOR FUNDS
 Amsterdam-listed Spyker bought Saab from General Motors Co
(GM.N) a year ago but the loss-making Dutch firm has struggled
to turn it around, and scrambled to find new sources of funding
in recent weeks in order to restart production.
 The latest deal involves an agreement by Pangda to buy Saab
vehicles in two tranches. An initial purchase worth 30 million
euros is already in train and a further sale worth 15 million
euros will follow, Muller told journalists on Monday.
 Pangda, which raised raised nearly $1 billion in its initial
public offering last month [ID:nL3E7FS079], will also take a 24
percent equity stake in Spyker for a total of 65 million euros,
or 4.19 euros per share.
 "It still requires a lot of work before this 65 million is
in our bank account, to get the permits," Muller said, but "when
we have the 65 million euros, it will be enough for the
mid-term, or a year." 
 Muller said Pangda and Spyker will set up a manufacturing
joint venture with a third party, as yet undecided, and plan to
produce Saab branded vehicles as well as a jointly owned brand.
He said it would take two years before production started in
China.
 "It's still not definite but at least it's a step in the
right direction," said Tom Muller, an analyst with Theodoor
Gilissen. "Now they can get on with production and try to break
even next year."
 
 CHINA PARTNER
 Pangda already handles the Toyota (7203.T), Honda (7267.T)
and Subaru brands in China, and is run by Pang Qinghua, a
55-year-old entrepreneur who started his career in a state-owned
machinery factory. He ranks 100th on the Forbes list of Chinese
billionaires and has a net worth of $1.1 billion.
 Chinese car firms need to expand their product ranges at a
time when sales at home are expected to slow, after the
government withdrew policy incentives that helped elevate the
country to the world's top auto market in 2009. [ID:nL3E7FI0YI]
 In addition, Pangda is suffering from the fall-out of
Japan's devastating earthquake and tsunami which has disrupted
supply chains for many of the brands it currently deals with.
 "Both parties are confident that this partnership allows
Saab Automobile and Pangda to create a strong business,
initially in the distribution and subsequently in the
manufacturing of Saab vehicles in China," CEO Victor Muller said
in a statement.
"Pangda is a forward-looking, profitable and well-capitalised
public company that, as the single largest automobile
distributor in China, sees enormous potential for our brand in
their home market," he added.
(Additional reporting by Simon Johnson and Patrick Lannin in
Stockholm and Alison Leung in Hong Kong; editing by Sophie
Walker)
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