Saab's Chinese rescue crashes

12th May 2011, Comments 0 comments

Chinese rescue funding for the Saab-Spyker auto group collapsed on Thursday, throwing Swedish Saab back into deep financial crisis without keys to the crucial Chinese market.

The latest setback casts further doubts over the Dutch-Swedish consortium's efforts to secure long-term funding to rescue the struggling carmarker, an analyst said.

The bailout partnership worth 150 million euros in cash from Chinese firm Hawtai Motor Group needed to get Saab's production line restarted disappeared as suddenly as it had emerged.

Saab and its Dutch owner Spyker announced that the deal, agreed only last week, was off "with immediate effect" because Hawtai Motor Group had been unable to obtain approvals needed for it go through.

Saab spokeswoman Gunilla Gustavs voiced disappointment, saying that Saab continued to look for other partners in China.

"It's fair to say that it is disappointing," she told AFP in Stockholm.

"The work continues to secure short and medium term funding," she said adding "it (Saab) is open to both continued dialogue with Hawtai and with others, including Chinese partners."

She declined to comment on whether the collapse of the deal was linked to comments by Sweden's top diplomat in Beijing last week.

On Friday, Hawtai defended itself against claims reportedly made by Swedish ambassador Lars Freden which raised doubts about its ability to salvage Saab.

"I have no information on that," Gustavs said when asked about Freden's comments.

Swedish Prime Minister Fredrik Reinfeld on Thursday stressed that although worried, the Swedish government would not come to Saab's rescue.

"It is the owners and the management of Saab that must take this forward and find long-term financing."

"We in the government have done all we could to facilitate the process," Reinfeldt told reporters in the western city of Gothenburg, near Saab's factory in Trollheattan.

Spyker, a small auto firm, said in a press release: "Spyker announces today that Hawtai Motor Group Company Limited and Spyker terminated the agreement by and between Hawtai, Spyker and Saab Automobile with respect to funding and (a) strategic partnership."

Announced on May 3, the Hawtai deal was to inject into Saab 120 million euros ($170.6 million) from the Chinese car maker in return for a stake of up to 29.9 percent in Spyker, and a further 30 million euros in the form of a convertible loan.

It was seen as a last-minute lifeline for Saab, where production stopped on April 6 "until further notice" because unpaid suppliers had halted deliveries.

Spyker itself had rescued Saab in January 2010, buying it from the US giant GM, then in serious financial difficulties, for $400 million.

Spyker had great plans for Saab, a company that did not turn a profit for 20 years under GM.

The Hawtai deal was subject to approval and conditions including consent from Chinese government agencies, the European Investment Bank and the Swedish National Debt office.

"Hawtai was subject to definitive transaction documentation and certain conditions which included the consent from stakeholders," Spyker said.

"Since it became clear that Hawtai was not able to obtain all necessary consents, the parties were forced to terminate the agreement with Saab Automobile and Spyker with immediate effect."

The latest setback cast doubt over ongoing funding of the company, said IHS Global Insight automotive analyst Ian Fletcher.

"It should not be a surprise that the situation has changed already, given the murmerings surrounding the deal," he said.

Other potential investors waiting in the wings "will need to jump through the same hurdles," he said.

© 2011 AFP

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