The on-off-on saga of Swedish car maker Saab may finally be reaching its conclusion but which way it will go remains uncertain.
China's Minister of Industry and Information Technology, Miao Wei, has given 'in principle' support to Pang Da and Zhejiang Youngman Lotus in the latest deal to bail out the failing Scandinavian car producer. The news initially came as welcome relief to Swedish Automobile, owners of the Saab brand, as China's nod is seen as crucial in the process.
However, GM, a major Saab shareholder has put the deal in jeopardy once more after hardening its earlier lukewarm response by stating that it had severed all ties with Saab and will no longer supply the company with technology licences or the 9-4X model platforms. The US car maker advised that "the proposed change in ownership as it would not be in the best interests of GM shareholders." The company is concerned about the potential negative impact on its existing relationships in China.
As previously reported, the complicated arrangement has been hanging in the balance for several months with no vehicles being produced while negotiations have continued. Bizarrely, despite having a lifeline inked between the Chinese auto companies and Saab back in July 2011 worth CNY2.2bn ($347m Saab appeared to terminate the deal at the end of September with only days to go before a court hearing for bankruptcy.
The situation had reached crisis point for Saab with administrators asking Swedish courts to remove bankruptcy protection because there were not enough funds likely to be forthcoming to save the business, despite the Chinese claiming the deal remained valid and a US-based finance company also in the wings.
With the clock ticking towards the carmaker's doom, negotiations were finally completed; Pang Da and Youngman taking 100% ownership of the Saab brand from Swedish Automobile at a cost of around CNY900m ($142m) plus a CNY445m ($70m) bridging loan and promise of CNY5.4bn ($851m) in long-term financing.
While the Chinese Government's tacit approval was a major step forward, the GM statement has dealt a major blow to the deal and, potentially, to the Saab brand. Ratification from other current shareholders, including the European Investment Bank and the Swedish Government are also still required. According to some commentators, the deal itself may be one of the simpler challenges facing the brand and its possible new owners.