The two Chinese companies that plan to buy Saab Automobile pledged to invest 610 million euros ($844 million) in the Swedish carmaker, prompting a court to extend the manufacturer’s protection against creditors.
Pang Da Automobile Trade Co. and Zhejiang Youngman Lotus Automobile will also provide an immediate 50 million-euro bridge loan to help debt-laden Saab survive as it reorganizes, Guy Lofalk, the attorney overseeing the program, said in Vaenersborg District Court yesterday. Saab’s owner, Swedish Automobile NA, said separately that about 500 jobs will be cut.
“Saab will now have a real chance to thrive,” Chairman Victor Muller said in an interview at the court in southwestern Sweden. “But we have a lot of work ahead to even get the investment approved, and Saab has suffered tremendous damage to its brand and supplier base that must be overcome.”
The Swedish court decided yesterday to continue to shield Saab from creditors after a hearing at which the Trollhaettan- based carmaker presented its business plan and where suppliers that are owed money could voice their opinion. Saab, which has produced few cars since it first halted production in March because of a lack of money, avoided bankruptcy in September after an appeals court granted the voluntary reorganization.
Parent’s Stock Declines
Swedish Automobile fell 15 percent to close at 53 euro cents in Amsterdam yesterday. The company, which is selling its Spyker supercar division, is valued at about 14.8 million euros.
Youngman and Pang Da agreed on Oct. 28 to buy Saab for 100 million euros from Zeewolde, Netherlands-based Swedish Automobile.
Saab laid out a target yesterday of selling 35,000 to 55,000 cars next year and becoming profitable by 2014, when it plans to deliver 130,000 to 150,000 vehicles. The manufacturer has identified 1 billion kronor ($153 million) in structural cost savings, which partly would come from the job cuts, it said.
The Swedish company’s long-term sales target is to produce 185,000 to 205,000 vehicles a year, Martin Larsson, the carmaker’s business-development chief, said at the hearing.
“I believe strongly that Saab’s production capacity in Sweden will be completely used up,” Pang Qinghua, chairman of Pang Da, said in an interview at the court. The two buyers aim to build a Saab factory in China with annual capacity of at least 100,000 cars “in the next year or two,” he said.
The court panel led by Judge Stefan Nilsson ruled that the investors’ agreement provided the carmaker with cash to pay for immediate expenses, while the long-term business plan was viable. All the suppliers who commented at the hearing, including Autoliv Inc. (ALV) and Continental AG (CON), supported a continuation of the reorganization.
“We think this is the best we’ve heard in a long time, so we absolutely support this,” Peter Hallberg, head of Saab’s Swedish dealers, told the judges.
Saab’s workforce totals about 3,600 employees, including 3,400 in Trollhaettan, Gunilla Gustavs, a spokeswoman, said in an interview. That’s 100 fewer than the number on the carmaker’s payroll in August.
Parties that must approve Saab’s sale include Chinese authorities, the Swedish government and the European Investment Bank, as well as former owner General Motors Co. (GM) and Bayerische Motoren Werke AG (BMW), which last year agreed to supply engines to Saab’s future models.
“We have a lot of water under the bridge before this deal is done,” Muller said.
To contact the reporter on this story: Ola Kinnander in Vaenersborg, Sweden, at firstname.lastname@example.org
To contact the editor responsible for this story: Chad Thomas at email@example.com