It seems Volvo is no longer the only Swedish automaker with fiscal ties to a Chinese car company. Saab announced yesterday that it received some short-term funding courtesy of the Hawtai Motor Group, a Chinese automaker that now holds a 29.9-percent stake in the company.
Billed by the automaker as a “joint venture on manufacturing, technology, and distribution,” the agreement essentially hawks a chunk of Saab-Spyker to the Chinese in order to give Saab the operating liquidity it so desperately needs.
Hawtai’s investment provides the company nearly 150 million Euros ($222 million USD) in funding, but only 120 million Euros ($177 million) are tied to the equity stake itself. The remaining 30 million Euros ($44.3 million) come from a convertible loan issued by Hawtai itself.
This announcement follows last week’s announcement that Saab managed to scrape up 60 million Euros ($88.7 million) in short-term funding, half of which is tied to a new loan from Gemini, a European investment firm that was already a Spyker shareholder. Saab also planned on making a drawdown request to the European Investment Bank for 29.1 million Euros ($43 million).
“Saab is now well financed,” CEO Victor Muller said in a prepared release. “It has secured its short and mid-term financing needs. That puts the credit crunch that the company went through in April to bed.”
Officials tell Automotive News that production within the company’s assembly plant in Trollhattan, Sweden, should resume “early next week.” Even so, the disruption in production makes selling 80,000 Saabs globally by the end of 2011 — already an optimistic goal, to say the least — completely impossible.
It may, however, have an improved means of selling its products in China. While the liason with Hawtai immediately gives Saab some liquidity, it potentially allows the company to expand its Chinese distribution market. Conversely, it theoretically gives Hawtai a consumer-focused offering, allowing it to round out its portfolio, which presently consists primarily of SUVs, trucks, and buses.
Although this appears to be a done deal, Saab notes the agreement is subject to the approval of several parties, including the EIB, the Swedish National Debt Office, and several Chinese regulatory boards.
Source: Saab, Automotive News (Subscription required)