Saab ends investment agreement with Chinese firms

Pang Da Automobile Trading and Zhejiang Youngman Lotus Automobile had "failed to confirm their commitment" to the agreement and provide bridge funding, the Swedish Auto said in a statement. The company also rejected two subsequent conditional offers from the Chinese parties to buy Saab, though discussions are continuing, Bloomberg reported.

Saab first halted production in March due to lack of funds and has produced few cars since then. It filed for protection from creditors in September, three months after Pang Da and Youngman Lotus agreed to pay EUR245 million ($340 million) for a combined 53.9% stake in Saab's parent.

The carmaker plans to contest a court application from administrators that restructuring of the company should be stopped. It said that North Street Capital pledged funds on October 20 that should allow it to continue operations.

Analysts speculated that the Pang Da and Youngman Lotus' failure to land the asset is a blessing in disguise because the companies are not in a position to save Saab. "Only a big automaker has the means to revive Saab, which is not only debt- ridden but also having problems on their branding and technologies," John Zeng, an analyst at J.D. Power & Associates, told Bloomberg.

Zhejiang Geely Holding Group, the parent group of Chinese carmaker Geely Automobile Holdings, earlier this month denied any interest in Saab. GS Capital Partners, Goldman Sachs' private equity arm, bought a 15.1% stake in Geely for $245 million in 2009, and the Chinese firm went on to acquire Volvo from Ford Motor for $1.8 billion.

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• Topics
• Greater China
• Europe
• Industrials
• Restructuring
• China
• Europe
• automobiles
• M&A
• North Street Capital
• Goldman Sachs