STOCKHOLM (Reuters) - Chinese groups Pang Da Automobile Trade Co (601258.SS) and Zhejiang Youngman Lotus Automobile Co will pump more than half a billion euros ($709 million) into Swedish carmaker Saab, aiming to return the struggling carmaker to profit by 2014.
The plans were outlined in documents submitted to a Swedish court, which ruled on Monday 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, which agreed last week to buy Saab for 100 million euros from current Dutch owner Swedish Automobile SWAN.AS, have set their sights on sales of up to 55,000 Saab cars for 2012 and have promised a volume of up to 205,000 units per year longer term.
The plans come a year after another Chinese company, Geely, bought Saab peer Volvo from Ford Motor Co (F.N).
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. Saab has not produced cars for months and has been under court protection from creditors to stop bankruptcy filings.
Under the rescue plan, the Chinese investors will provide a 50 million euro bridge loan and 610 million in long-term financing from 2012.
“Pang Da and Youngman are not looking for quick returns as a purely financial investor would be,” court-appointed administrator Guy Lofalk said in a document prepared for the creditors meeting.
“Their investment in Saab is driven by a business interest and a long-term strategy.”
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.
The plan will come at cost: the new owners aim to reduce structural costs by 1 billion Swedish crowns ($157 million) and reduce the headcount by 500 employees. Saab employs about 3,400 people at its ultra-modern plant in Trollhattan, western Sweden.
Davidovic said he expected remaining October salaries would be paid during the day. Martin Wastfelt, an official at Unionen, a white-collar union with 1,100 members at Saab, told Reuters salaries had reached its members.
Suppliers are also owed more than 150 million euros, which Saab’s administrator said the new owners aimed to honor in full.
Youngman and Pang Da plan to keep production in Sweden, but also want to build Saab cars in China.
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.”
Swedish Automobile, then called Spyker, rescued Saab from closure by former owner General Motors Co (GM.N) in early 2010.
GM still has preference shares in Saab and is a major supplier of components and so must approve the Pang Da and Youngman takeover.
Geely’s purchase of Volvo, which aims to sell more than 400,000 cars this year, was China’s largest overseas auto acquisition.
Youngman and Pang Da’s offer for Saab also still needs the green light from the European Investment Bank and the Swedish government, all creditors to Saab.
($1 = 6.355 Swedish Crowns)
($1 = 0.705 Euros)
Additional reporting by Anna Ringstrom; Editing by Jon Loades-Carter and Helen Massy-Beresford