(Corrects company reference in third paragraph of story published Oct. 24)
Oct. 24 (Bloomberg) -- Swedish Automobile NV said it has given notice to terminate an agreement to sell a majority stake in Saab Automobile to two Chinese companies and rejected their offers to buy all of the European carmaker.
Pang Da Automobile Trading Co. and Zhejiang Youngman Lotus Automobile Co. had “failed to confirm their commitment” to the agreement and provide bridge funding, Swedish Auto said in a statement yesterday. The Zeewolde, Netherlands-based carmaker also found subsequent conditional offers from the two companies on Oct. 19 and Oct. 22 to buy all of Saab “unacceptable,” though discussions are continuing.
“Failure of the Saab deal may be a good thing because Pang Da and Youngman can’t save Saab no matter how much they invest,” John Zeng?a Shanghai-based analyst at J.D. Power & Associates, said in a telephone interview. “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.”
Saab filed for protection from creditors in September, three months after Pang Da and Youngman Lotus agreed to buy a combined 53.9 percent stake in Saab’s parent for 245 million euros ($340 million). The automaker has produced few cars since it first halted production in March because of a lack of money.
“All plans that are beneficial for Saab should be discussed during the reorganization,” Pang Qinghua, chairman of Pang Da, China’s biggest auto dealer by market value, said in a telephone interview. “We have been in touch after the weekend announcement and continue to look at new proposals.”
Swedish Automobile fell 11 cents, or 14 percent, to close at 70 cents in Amsterdam trading. The stock has dropped 80 percent this year, valuing the carmaker at 19.2 million euros.
“We would still like to continue helping Saab, directly providing short-term and long-term funding to Saab by way of other investment schemes,” Youngman Lotus said in a statement today, adding that it regretted Saab’s “unilateral” decision.
Attorney Guy Lofalk, Saab’s court-appointed administrator, has applied to the Vaenersborg District Court in Sweden to terminate the restructuring of the carmaker. Saab will contest the decision and ask for a new administrator.
For the reorganization to continue, the court must see that Saab has cash to pay for immediate expenses. Trollhaettan, Sweden-based Saab said Oct. 20 it received a $70 million funding pledge from North Street Capital LP, a Greenwich, Connecticut- based private-equity firm.
China’s top planning agency said Oct. 11 that Chinese companies should adopt a cautious approach toward investing in Saab and warned of the danger of a “bottomless pit.”
“The two Chinese companies were hot-headed and jumped into the deal without realizing they can’t save the company,” Zhang Xin, a Beijing-based auto analyst at Guotai Junan Securities Co., said in a telephone interview. “Pang Da and Youngman may look for other opportunities to acquire a foreign brand in the future as they see it as the way to expand in the car manufacturing business.”
--Tian Ying, with assistance from Alex Webb in Frankfurt. Editors: Chua Kong Ho, Tom Lavell.
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