UPDATE 2-China's Youngman comes up with vital cash for Saab
* Final payments expected this week and by Oct. 22
* Saab expects Chinese investment approvals in coming weeks
* Saab shares rise 20 pct, top Amsterdam gainer
By Mia Shanley and Aaron Gray-Block
STOCKHOLM/AMSTERDAM, Oct 13 (Reuters) - Chinese car maker Zhejiang Youngman Lotus Automobile Co. gave ailing Saab a new injection of cash, Saab said on Thursday, keeping alive the Swedish car maker's hopes of survival.
The money is part of a 70 million euros ($97 million) loan planned by Youngman that is intended to see Saab through a period of creditor protection until Chinese authorities approve a bigger investment by Youngman and China's Pangda .
That approval could come in weeks, Saab said.
"We are putting bridge financing in place so we can fund business during the reorganisation -- so we don't incur new debt," said Saab spokeswoman Gunilla Gustavs.
"We have running costs, such as electricity, that we need to take care of. There are a number of business-critical operations that need to be funded," she added.
Saab hopes the Chinese investment will give it a long-term future, though analysts have noted the company's small size in what is a competitive market. Chinese investment has already saved one Swedish car maker when Geely bought Volvo in 2010.
Saab would not say how much money had been paid by Youngman, but Swedish newspaper Dagens Industri reported on Wednesday that Saab had received about 100 million crowns ($15 million).
More payments will be made this week.
Gustavs would not say why the Youngman cash was being paid in chunks but said the full amount should arrive by Oct. 22.
She said some of the Youngman cash would likely be used to pay October salaries. A state guarantee on wages that kicked in during the company's reorganisation is due to expire on October 21, just days before October wages are due.
Saab has struggled for months to stave off collapse, seeking new investors and selling off assets to pay suppliers and employees and resume production at its plant in Sweden.
In June, Saab's owner signed a non-binding memorandum of understanding for Youngman to take a 29.9 percent stake in the company and for Pangda to take a 24 percent stake, for a combined 245 million euros.
Saab expects Youngman and Pangda Automobile Trade Co Ltd to receive Chinese approval for the planned long-term investment "during the next weeks", it said in a statement.
Still, gaining Chinese government clearance could be difficult because Beijing follows a strict, price-sensitive policy when it comes to overseas acquisitions.
Failure to gain Beijing's approval on time torpedoed a deal Saab entered into with Chinese company Hawtai Motor Group in May, while Sichuan Tengzhong Heavy Industrial Machinery's bid to buy GM's Hummer in 2010 also fell through.
- Tweet this
- Share this
- Digg this